Annual Report(Integrated Report)
2022
Year ended March 31, 2022

Contributing to
the Construction ofSocial Infrastructure

Editorial Policy
This “Annual Report (Integrated Report)” is a publication for the Furukawa
Company Group’s shareholders and other investors. It is an integrated
report that includes financial information from the Group’s “Annual
Securities Report” and environmental, social, and governance (ESG)-related
information from its “Corporate Governance Report” and “Sustainability
Report.” The intention of this Annual Report is to foster a more accurate
understanding of the integrated thinking, strategies, and actions of theGroup while covering the information necessary for shareholders and otherinvestors.
In addition to these reports, we post news releases and financial results
briefing materials on our corporate website in a timely and appropriatemanner.

Furukawa Co., Ltd. website
Investor Relations

Contents
Corporate Management / Business Strategy
About the Furukawa Company Group1

The Furukawa Company Group’s Value Creation Process

2

Interview with the President

4

ESG Close-Up/ Strengthening our sustainability promotion
framework to meet the carbon neutral challenge

10

Review of Operations

12

Topics18

ESG Information

https://www.furukawakk.co.jp/en/ir/
Target Period: April 2021–March 2022
(Some activities before and after this period are also included.)

Annual Report (Integrated Report)

Annual Securities
ReportCorporate Governance
ReportSustainability
Report(Financial information)(ESG information)(ESG information)

Statement about Changes to English Financial Statements
As a company listed on the Prime Market of the Tokyo Stock Exchange, sinceApril 2022 we have been translating and publishing financial statements andother materials into English for timely disclosure. For financial statements andother information in this report, therefore, we use the English translation of our
financial statements, which are based on Japanese generally accepted accounting principles (Japanese GAAP). Those financial statements (based on JapaneseGAAP) have been properly audited by the firm that audited the Company’s
Annual Securities Report.
Forward-Looking Statements
This Annual Report (Integrated Report) contains information about the Furukawa Company Group’s plans, strategies, and future prospects. Such information,
which is based on information currently available and reflects determinations
deemed rational by the Group at the present time, includes various risks anduncertainties. Actual results may differ significantly from forecasts contained
herein due to these changing uncertain factors.

The Furukawa Company Group’s ESG Activities

19

CSR / ESG Issues

20“Marketing-Based Management” That Incorporates CSV Perspectives

21

Corporate Governance22

Directors / Skills Matrix

26

Audit & Supervisory Board Members / Executive Officers

28

Message from an Outside Independent Director

29

Risk Management

30

Compliance

31

Environmental Initiatives

32

Social Initiatives

34

Financial Information
Consolidated 11-Year Data

36

Management’s Analysis of Operating Results,
Financial Position, and Cash Flows

40

Consolidated Financial Statements

50

Corporate Data

56

Corporate History

57

About the Furukawa Company GroupThe key to the success of the Furukawa Company Group, which recently celebrated the 147th anniversary of its founding, began with thedevelopment of the Ashio Copper Mine by founder Ichibei Furukawa. Since then, we have moved in line with the times and developed andadvanced our technologies, amassed through mine development, to build our two current business domains: the Machinery business andthe Materials business. Today, we are increasing our focus on niche products that reflect our expertise and boast a high market share. We
are also stepping up efforts to practice “marketing-based management”*1 that incorporates
CSV*2 perspectives by deploying our unique technologies and past experience. In particular, our
Machinery business, positioned as a core business, responds to market needs and contributes tothe development of social infrastructure.
By continuing to offer products that are indispensable to society, we aim to resolve various
social issues and help realize a sustainable society. We are working hard every day to achieve our
Vision for 2025, entitled FURUKAWA Power & Passion 150*3, as we approach fiscal 2026, the150th anniversary of our founding.

Ashio Copper Mine (around 1920)*1 “Marketing-based management”
This means incorporating marketing into the core of management to provide products and services recognized as valuable in 		changing markets, as well as to identify and resolve issues and problems faced by customers, with the aims of deepening ties
with customers, achieving sustainable growth, and increasing corporate value.
*2 CSV (creating shared value)
This is a management framework that enables companies to co-create “social value” and “corporate value” by tackling social,environmental, and other issues.
*3 FURUKAWA Power & Passion 150
The “Power & Passion” symbol expresses the “power and speed” and the “passion and enthusiasm” aspects of our business approach.
The perfect red circle conveys the connections and bonds we have with customers, and “150” represents the 150th anniversary of our
founding in 2025, which is the year for achieving our vision.

Management Philosophy

The Furukawa Company Group will remain indispensable to society by always embracing
a spirit of challenge, advancing the technologies that have underpinned the foundationof society that originated in mining development.
Action Guidelines
In order to live up to our Management Philosophy, we put our Action Guidelines of Innovation, Creativity and Harmony into practice, while always bearing in mind the three key words,
Luck, Stolidity and Perseverance that best represents the spirit of our founder.
Innovation : We will work constantly at self-innovation by embracing a future-oriented mindset.
Creativity : We will seek to create reliable, appealing products that meet market needs.
Harmony : We will improve management transparency and contribute to the development of		 a society that is in harmony with the environment.

Financial / Non-Financial Performance
2017/3

2018/3

2019/32020/32021/32022/3

149,829

167,695

174,116

165,215

159,702

199,097

Operating profit (Millions of yen)

6,545

7,820

8,915

8,693

5,592

7,734

Profit attributable to owners of parent (Millions of yen)

4,254

4,774

4,654

4,431

7,468

6,477

Basic earnings per share (Yen)105.29118.16116.23112.23190.73165.87Return on equity (ROE) (%)

5.9

5.9

5.7

5.8

8.9

6.9

Return on sales (%)

2.8

2.8

2.7

2.7

4.7

3.3

Total asset turnover (Times)

0.7

0.8

0.8

0.8

0.7

0.9

CO2 emissions (Thousand t)

25

26

26

22

21

22

Total emissions including waste, etc. (t)

5,347

6,884

7,160

7,039

5,912

6,347

Number of employees (Persons)

2,616

2,690

2,757

2,755

2,752

2,804

Fiscal year

Net sales (Millions of yen)

Annual Report 2022

1

The Furukawa Company Group’s Value Creation Process
The Furukawa Company Group has a long history of 147 years. Since our beginning in mine development, we have undergone varioustransformations, diversified our operations, and overcome many difficulties. This history forms the foundation of today’s Furukawa Company
Group. Embracing the philosophy of Ichibei Furukawa, our founder, we have practiced marketing-based management that incorporates
CSV*3 perspectives by developing mines and other technologies that support social infrastructure. As a result, we have continued to innovate
products and services that are reliable and appealing and satisfy social and market needs. With a commitment to “category leadership anduniqueness,” we aim to create “corporate value” by providing infrastructure, products, technologies, services, and the like that help resolve
social issues. At the same time, we will continue fostering the creation of “social value” by improving social infrastructure and realizing
a safe, environmentally friendly, and prosperous society.

Management Philosophy
The Furukawa Company Group will remain indispensable to society by always embracing a spiritof challenge, advancing the technologies that have underpinned the foundation of society thatoriginated in mining development.

Mining technologies
Exploitation
technologies

Drilling
technologies

Transport / Mineral processing
technologies

Hydrauliccontrol
technologies

Slurrytransportation
technologies

Grinding
technologies

Exhaust gas
treatment
technologies

StrategyRock Drill Machinery

UNIC Machinery

Industrial Machinery

Manufacture and sale ofhydraulic breakers, hydrauliccrushers, hydraulic crawler drills,
tunnel construction and mining
machinery, etc.

Manufacture and sale of UNIC
cranes, mini-crawler cranes,
ocean cranes, UNIC carriers, etc.

Manufacture and sale of pumps,
crushers, and other material
machinery, bridges, belt conveyors
and heat- and abrasion-resistantcastings; various construction
contracts

Vision for 2025
Medium-Term Business Plan

ROE
ROA

CSR*1
ESG*2

*1 CSR
The purpose of our CSR activities is to realize ourManagement Philosophy of “remaining a company thatis indispensable to society.” This means fulfilling our
CSR to stakeholders—customers, business partners,
employees, shareholders and other investors, local
communities, and the global environment—byclarifying our responsibilities, considering andaddressing goals and issues, and explaining the
progress and outcomes of our initiatives.
*2 ESGThe Group recognizes ESG as one of the criteria for
corporate investment and an important perspective
for business operations. We strive to enhance
corporate value by clarifying the relationship between
ESG and our CSR priority issues, medium-term CSR
targets, and relevant major SDGs by classifying themas CSR and ESG issues in the environmental (E),social (S), and governance (G) fields.

2

FURUKAWA CO., LTD.

Machinery Business“Corporate Value”“Marketing-Based Management”

Seeking to realize our Management Philosophy, we are currently implementing our Vision for 2025 in the approach to our 150th
anniversary in fiscal 2026. The vision is divided into three phases, each with its own medium-term business plan. In our business activities,
which center on the Machinery business and the Materials business, we will bring together technologies cultivated over many years and new
strategies while also taking return on equity (ROE), return on assets (ROA), business portfolio management, corporate social responsibility(CSR*1), ESG*2, and enterprise risk management*4 into account. We will also help achieve the Sustainable Development Goals (SDGs) andcontinue contributing to the realization of a sustainable society by resolving various social issues, including national resilience challenges, adeclining workforce, and moves toward a decarbonized society. This is the Group’s value creation process for realizing its Management Philosophy.

Smelting
technologies“Category leadership and uniqueness”
Flash smelting
technologies

MetalsSulfuric acidproduction
technologies

ChemicalsElectric
technologies

Electronics

Products /Technologies /Services“Social Value”
Creation

Establish social infrastructure
Realize a prosperous society that issafe and environmentally friendlySale of electrolytic
copper, electrolytic
gold, electrolytic
silver, sulfuric acid,etc. (producedby smelting on
consignment)

Manufacture andsale of sulfuric acid,polyferric sulfate
aqueous solution,
sulfate band,
cuprous oxide,
cupric oxide, etc.

Manufacture andsale of high-purity
metalic arsenide,
crystal products,
core coils,
aluminum nitride,
opticalcomponents, etc.

Materials Business

Creation through Business Activities

That Incorporates CSV*3 Perspectives

Business
Portfolio
Management

Enterprise
Risk
Management*4*3 CSVFor the Furukawa Company Group, creating
shared value (CSV) means creating “corporate
value” by providing infrastructure, products,
technologies, services, and the like that help
resolve social issues. It also means fostering thecreation of “social value” by improving social
infrastructure and realizing a safe, environmentallyfriendly, and prosperous society.
*4 Enterprise Risk Management
One of the methods of risk management (crisis
management). It refers to a system that attempts
to manage all possible risks that may occur incorporate management on a enterprise basis

Social Issues /Needs

Annual Report 2022

3

Interview with the President“Facing Difficult Social Issues…”
Minoru Nakatogawa, President and Representative
Director, looks back on the first year of his appointment and discusses the strengths of the Furukawa
Company Group since its founding and growth
initiatives for the future.

President and Representative Director

Minoru Nakatogawa

Q1.

Fiscal 2022 was your first year as President and the second year of Phase 2 of Vision for 2025.
How do you evaluate the Group’s performance?
My honest assessment is that we have recovered from declines in sales and profit caused by the COVID-19
pandemic and are finally back on the starting line of Phase 2.

I took office in the midst of the pandemic and was deeply
engrossed in various challenges. In the past year as well, ouroperating environment has changed dramatically, and I havebeen thinking about the direction we should take while working to achieve the targets we have set for the year.
In the fiscal year under review, we faced various negative
factors, including shortages of semiconductors and key components, rising raw material and energy costs, and higher freightrates due to lack of container transport capacity. However,I am happy to see that sales and profit increased beyond our
initial forecast compared with the previous fiscal year, when we
suffered a major setback due to the pandemic. This is because
the Rock Drill Machinery segment, which had been struggling,
returned to profitability, while the Electronics segment andQ2.

Chemicals segment also posted their highest profit figures in
the last 10 years.
While the Metals segment posted increases in sales and profit, this was mainly due to gains from rising copper prices, andissues remain with the loss-making structure of the contracted
copper smelting business and the segment’s structure, whichis influenced by metal prices and exchange rate trends. Overall,our results were not satisfactory from the perspective of Vision
for 2025, which positions the Machinery business as our corebusiness. This was due in part to delays in crane installation
caused by reduced truck production in the UNIC Machinery
segment. Nevertheless, my honest assessment is that we havefinally recovered from the pandemic and are back on the starting line of Phase 2.

Let’s start with the Machinery business. What is the progress so far of Medium-Term Business
Policy 2022 and Vision for 2025? What challenges remain and what are your strategies for overcoming
those challenges?
Transformation of the Rock Drill Machinery segment, which had been a priority issue, is nearing completion,and inquiries for belt conveyors and other environmentally friendly products in the Industrial Machinery
segment are increasing. However, we clearly recognize issues in the Machinery business, such as the needto build a structure that is less susceptible to truck production cutbacks in the UNIC Machinery segment.

Our challenge is to improve the growth and profitability of theGroup’s core Machinery business, and we must presenta growth strategy to meet this challenge.
4

FURUKAWA CO., LTD.

In the Industrial Machinery segment, inquiries about belt
conveyors and section plant material machinery are increasingInterview with the President

as the Group seeks to move away from being a mere equipment manufacturer. We expect orders to increase for belt
conveyors, which play a role in addressing social issues, suchas building national resilience in Japan and disaster prevention/
mitigation. They are also environmentally friendly and help
reduce CO2 emissions as an alternative to dump trucks. In
material-related machines, we are aiming to boost orders for
section plant construction projects centered on crushers, astrategic product.
The Rock Drill Machinery segment has finally returned to
profitability after a series of losses. Although this is largely due
to the weak yen and strong demand for construction equipment in North America, we are reforming our management
and shifting from a “volume-oriented” to a “profit-oriented”
mindset. We are well underway with structural reforms, suchas clarification of strategies by product and region, as well as
reorganization and consolidation of overseas subsidiaries, andthe benefits of these reforms are becoming evident. In addition,
we will strengthen our Life Cycle Support (LCS)*1 capabilities.
Our aim is to commercialize intangible services by making andimplementing proposals that benefit customers and help themgrow, while improving work efficiency and reducing use of
consumables through more effective operational analysis.
We will also reap the rewards of our stock business*2 in thenext fiscal year and beyond.
In the UNIC Machinery segment, we have completed capital
investment in the Sakura Works, and productivity is improving.

Q3.

However, shipments of UNIC cranes have been stagnant due
to reduced production of trucks stemming from difficulties inprocuring semiconductors and other products. This was despite
a solid backlog of orders. However, we expect conditions togradually recover in the second half of the current fiscal year
and beyond. Meanwhile, we anticipate increased demand forfully electric mini-crawler cranes thanks to the trend toward
non-CO2-emitting electrification, particularly in Europe. Thesemachines are expected to play an active role at construction
and other sites. In addition to emphasizing overseas sales,
we will step up sales of products other than UNIC cranes andcreate a structure that is less susceptible to truck production
and other external factors. In addition, we have suspended exports to Russia, where we have a sales subsidiary, and currently
do not sell our products there, but the impact on our businessperformance is negligible.

*1 Life Cycle Support (LCS): Providing and supporting optimal manage‑
ment services to reduce the cost of machinery ownership and operating
costs as much as possible throughout its entire life cycle (machine
selection and delivery, operation and maintenance, major repairs andreconditioning, and disposal and replacement).
*2 Stock business: Refers to after-market business (sales of spare parts,
maintenance services, used product trade-ins and sales, etc.) and rental
business, as opposed to flow business (product sales), which is more
susceptible to economic fluctuations. With relatively stable earnings,
we have positioned our stock business as one of our “foundations
for renewed growth” and are working to continuously expand andstrengthen it.

Please also tell us about the Materials business.
In the Metals segment, we are on track in overhauling our contracted copper smelting business and are
enjoying increased sales of aluminum nitride and cupric oxide. We will consider and make investments toincrease production of both items to meet further demand growth. Meanwhile, we have an issue withcommercializing and fostering our business in metallic copper powder, samples of which are currently being shipped.

In the Metals segment, we made good progress in overhaulingthe contracted copper smelting business, which was a priority
issue, and we regard this as a major achievement. In that business, it is difficult to expect a significant improvement in profit
due to procurement conditions (treatment/refining charges, or
TC/RC). In recent years, investments in environmental responses and maintenance and renewal, as well as soaring electricity
charges and other operating costs, have put pressure on the
profits of smelting and refining companies. Apart from generating profit from rising metals prices, therefore, it is a loss
making business. At the end of March 2023, we will terminate
our copper smelting contract with Onahama Smelting & Refining Co., Ltd. This will enable us to greatly reduce unprofitable
exports while fulfilling our responsibility to supply domestic
consumers with production volumes that reflect domestic
demand. Accordingly, we are confident of securing profitability
from the next fiscal year onward, excluding price gains/losses
due to metal price fluctuations.
In the Electronics segment, we are enjoying increased salesof aluminum nitride, an excellent heat-dissipating insulating
material, thanks to growing demand for such materials due toadvances in performance and integration of electronic devices
in recent years. In the current fiscal year, we are making investments to increase production in anticipation of further growthin demand. We are also considering investments in secondary
and tertiary facilities in the hope of tripling our current production volume in a few years, which will lead to stable growth of
the Electronics segment.

The Chemicals segment benefited from strong demandfor cupric oxide for plating used to make substrates, posting
record-high operating profit as a result. Meanwhile, our cupricoxide production remains at full capacity, and we are considering investments to increase production in anticipation of future
growth. Our challenge is to quickly commercialize metallic
copper powder, samples of which are being shipped, for use
in multilayer ceramic capacitors (MLCCs) that are in growing
demand.

Our copper smelting contract with Onahama Smelting & Refining Co., Ltd.
will be terminated.
Annual Report 2022

5

Interview with the President

Q4.

The current fiscal period is the final year of Phase 2. What are your thoughts on the next
medium-term business plan?
To realize Vision for 2025, we will focus on formulating our next medium-term business plan andpresenting our capital policy by considering what we should do to increase future corporate value. Here,we will use a blank slate unconstrained by current strategies.

Due to COVID-19 and changes in global conditions, theassumptions made when formulating Vision for 2025 havechanged significantly, requiring company management to give
proﬁtconsideration to global environmental issues.
even greater
For the Furukawa Company Group, we need to rethink whatsustainable growth means while coexisting with society andconsidering how we should increase corporate value for the
future. While discussing our future vision with key members ofeach business segment, we will formulate our next

Q5.

medium-term business plan using a blank slate unconstrainedby current strategies, in order to realize Vision for 2025.
We also believe we need to review our capital policy.
We need to make investments aimed at future business development. We will also consider effective utilization of assets andactively invest in growing businesses while striving to reduce
interest-bearing debt. In our next medium-term business plan,
to be announced in May 2023, we intend to present our capital
policy, including our capital structure.

You have been promoting ROE improvement and business portfolio management. What are yourspecific achievements and challenges to date, and what are your plans for the future?
We believe that improving profitability is the key to increasing ROE, and we will give top priority to
improving the ROA of each segment by creating a cost reduction framework and promoting greater awarenessthan ever before. We will also continue promoting business portfolio management.

Medium-Term Business Plan, etc.

Creation of “corporate value” and“social value”

Although we are making Groupwide efforts to improve ROE,
we are not satisfied with our result for the fiscal year underreview, which was 6.9%. Except for the 8.9% figure posted
in the previous fiscal year, which was boosted by extraordinary

Vision for 2025 (ideal image for 150th anniversary of foundation)
Targeting consolidated
annual operating
profit regularly inexcess of ¥15 billion

Become a corporate group that leverages its reputation for
category leadership and uniqueness to deliver growth(Established November 6, 2015)

Time period

Phase 1

Phase 2Phase 3Time period

FY2018–2020

FY2021–2023

FY2024–2026

Positioning

Build foundations
for renewed growth

Expedite growth andfurther improve profitability

Complete realization of
Vision for 2025

Name

Medium-TermBusiness Plan 2019

Medium-TermBusiness Policy 2022

Medium-TermBusiness Plan 2025

We postponed announcement ofMedium-Term Management Plan 2022
and instead decided to formulate/announce consolidated performance
forecasts for each single fiscal year.

We will consider disclosing the plan
when we announce our results forfiscal 2023.

Performanceindicators

OperatingprofitApprox. ¥8.5 billion [¥8.6 billion*]

ROE

Approx. 6–7% [5.8%*]* Figures in brackets represent actual results for fiscal 2020.

6

profit, our progress has been slow. Nevertheless, we have
improved from the 5% range of Phase 1 and have finallyreached the 6–7% range set as a performance indicator forthat phase. We believe that the most important issue to

FURUKAWA CO., LTD.

Interview with the President

improve Group ROE is to increase the profit margin, and weare promoting cost reduction efforts to achieve this goal. Whendeveloping a new screen product in the Industrial Machinery
segment, for example, our sales and factory teams emphasizedcost awareness from the design stage and worked together tobring costs down to the target level. These and other unprecedented efforts to improve profit margins are beginning to pay
off, and we intend to roll out such good practices horizontally
across the Group. Although conditions remain challenging due
to recent sharp increases in raw material prices and difficulties
in procuring parts, we will review our procurement practices
and establish cost reduction mechanisms and systems.
Regarding business portfolio management, we are on trackwith plans to overhaul our contracted copper smelting businessin the Metals segment, which has been a priority for sometime, by withdrawing from a portion of that business. We also
place top priority on improving profitability and efficiency,
which are key to improving segment-specific ROA. As a result,the awareness among heads of each department is changing.
We will continue reviewing and improving our businesses
going forward.

Q6.

Your Vision for 2025 is based on the concept of“category leadership and uniqueness.”
Could you tell us again about the strengths anduniqueness of the Furukawa Company Group?
Our spirit of challenge in addressing difficult
social issues and the technologies we have
evolved and developed from mining development
represent the strengths and distinctiveness of
the Group, which is based on the principle of“category leadership and uniqueness.”

Vision for 2025
“FURUKAWA Power & Passion 150”
Become a corporate group that leverages
its reputation for category leadership anduniqueness to deliver growth
We are targeting consolidated operating profit regularly inexcess of ¥15 billion as we approach our 150th anniversary
in fiscal 2026.

Strategies for Achieving Vision for 2025
1 Increase the value of the Furukawa brand through 				 “marketing-based management” that incorporates
		CSV perspectives
We will incorporate marketing into the core of management toprovide products and services recognized as valuable in changing
markets, as well as to resolve issues and problems faced bycustomers, with the aims of increasing corporate value andachieving sustainable growth. We will also strive to achieve theSustainable Development Goals (SDGs) and otherwise resolve
various social issues, including such domestic issues as building
national resilience and the declining working-age population,and thus help realize a sustainable society.

Reinforce technological sales capabilities (proposals and		 solutions) reflecting customer needs
Develop products, technologies, and services that meet		 market needs
Achieve category-leading positions by concentrating on
		 niche products that have competitive advantages and using a		 differentiation strategy
Cultivate and create new markets and product categories;
		 build a new business model
Enhance our products, technologies, and services, which		 underpin our social infrastructure, to help resolve social issues
2 Sustainably expand the Machinery business

Reinforce revenue bases in growing overseas markets mainly		 in businesses related to infrastructure and resource development

Our company began as a copper mine developer, but the major
challenge in our nearly 150-year history was pollution causedby the Ashio Copper Mine. Ichibei Furukawa, the Company’s
founder, did not turn a blind eye to the situation but instead
made a concerted effort to address it. It took many years tocompletely resolve the problem, but our engineers overcame
many difficulties with their strong spirit of never giving up andfinally established the world’s first copper smelting process that
did not generate any pollution. This spirit of directly confronting and earnestly addressing difficult social issues, as well as
technologies we have evolved and developed frommining development, have been passed down through thegenerations during Japan’s subsequent period of rapid
economic growth to underpin the nation’s social infrastructure,and have become the foundation of our Group today. Suchspirit and technologies are unique strengths that othercompanies do not have.
Worker safety is always a concern at dangerous construction and civil engineering sites. Accordingly, there is a strong
demand for automated and unmanned tunnel drill jumbos foruse in tunnel projects, and we were among the first to develop
and market such machines. Our long-distance belt conveyors,
adopted for reconstruction work following the Great East
Japan Earthquake to facilitate relocation to higher ground,have attracted attention as a method of conveying earth andStrengthen and enhance the stock businessMaximize business opportunities by demonstrating
		 comprehensive Group competencies and reinforcing
		 engineering strengths
3 Strengthen and expand our human resource bases

Build vibrant human resources and corporate culture for a		 new Furukawa
Secure, utilize, and develop diverse human resources in		 Japan and overseas
Put even more effort into training sales and marketing personnel
4 Actively promote investments to increase corporate value

Make proactive capital investments necessary for growth
Expand business through strategic M&As and alliances
5 Establish a robust corporate foundation

Increase corporate value by improving profitability and		 capital efficiency, targeting ROE of more than 10%
Establish a strong financial baseAchieve balanced appropriations between investments for		 growth and return to shareholders
Increase corporate value by emphasizing business practices
		 that reflect CSR and ESG issues recognized and to be solved
		 by the Group

Annual Report 2022

7

Interview with the President

sand more quickly and with reduced environmental impact.
These machines have now become a major pillar of the Industrial Machinery segment. Over the years, we have developed
a kind of resilience that we demonstrate when we encounter
difficulties and predicaments, and it is the driving force behind
our socially and environmentally conscious products, technologies, and services. By practicing “marketing-based management” that incorporates CSV perspectives, our spirit and technologies for resolving difficult social issues, which are based on
the concept of “category leadership and uniqueness,” are alive
and well in the Group.
Long-distance belt conveyors adopted for relocation works to higher
ground in Rikuzentakata City

Q7.

Currently, the Group’s price book value ratio (PBR) is well below 1.0. How do you perceive andrespond to the market’s evaluation of the Group?
Under our next medium-term business plan, which will clearly outline our growth strategy and capital policy,
we will foster a better understanding of our growth potential and future prospects while proactively investingin human resources.

We take the market’s evaluation of the Group very seriously
and believe that the reason why the PBR has fallen well below 1.0 is that it is difficult to see the Group’s future growthpotential, and we have not properly communicated our true
corporate value. Although our Vision for 2025 and otherdocuments convey the Group’s aspirations for the medium andlong terms, it may be difficult to appreciate the effectivenessand specifics of this vision. I try to meet with shareholders
and institutional investors on a regular basis, and my sense isthat they understand the vision and strategy that the Groupis pursuing. However, our low PBR means that we have notadequately demonstrated whether or not the Group will reallychange, how it will utilize its strengths, and the degree ofprogress it is currently making. Going forward, we will be moreproactive in our efforts to promote understanding throughQ8.

communication with investors. To this end, we will focus on
formulating our next medium-term business plan, which will
outline our growth strategy and capital policy.
Here, the Group’s indispensable human resources will be key
to our progress. We intend to make appropriate investments
in human capital by enhancing our education system to foster
personnel development, actively recruiting diverse humanresources from outside the Group, and supporting theadvancement of women. We will also work to realize a rewarding company where all officers and employees can maximize
their abilities.
By helping investors gain an understanding of these invisible
elements of corporate value, we hope to ensure that we are
evaluated appropriately.

You have updated your sustainability promotion framework. Please tell us about the background of
this and your future sustainability initiatives.
With the establishment of our Sustainability Promotion Meeting, we will strengthen our pursuit of sustainability more than ever before and proactively disclose details of our initiatives.

To further strengthen our sustainability efforts, in December
2021 we reorganized our existing CSR Promotion Meeting andrenamed it the Sustainability Promotion Meeting. As chair of thismeeting, I endeavor to clarify our sustainability responsibilities
to our stakeholders. After identifying key sustainability issues tobe addressed, we will proactively work to resolve those issues.
Recognizing the importance of enterprise risk management in
the pursuit of sustainability, meanwhile, we established a new
Risk Management Committee that will work in cooperation with
the Sustainability Promotion Meeting.
We believe the most important theme for the Group atpresent is our commitment to decarbonization. We are

8

FURUKAWA CO., LTD.

currently engaged in verification with each department aimed
at achieving the government’s target of a 46% reduction in
CO2 emissions by 2030 (compared with 2013) and carbon
neutrality by 2050. We aim to fully summarize our efforts
to achieve the government target and disclose them by theend of the current fiscal year at the latest. Japan’s Corporate
Governance Code also requires companies to disclose risks andprofit opportunities related to climate change based on thesame framework as the Task Force on Climate-related Financial
Disclosures (TCFD). We will also use our responses to the CDP
to phase in disclosures in line with the TCFD framework.

Interview with the President

Q9.

Investors and others are demanding more active and functional boards of directors. Please give us
your assessment of the current state of the Board of Directors and what challenges it faces in the future.

By having Outside Directors monitor management from an objective perspective, we will ensure that opinions
and sensitivities of the public, including our stakeholders, are reflected in management decision-making.

The Company employs an Audit & Supervisory Board tosupervise business execution and an executive officer system
to undertake business execution. Currently, three of the nine
directors are Outside Officers responsible for supervising management from an external perspective. The Board of Directors
engages in active exchanges of opinions and discussions,
including with Outside Directors. Based on annual surveys
of directors and Audit & Supervisory Board Members, we
are working to improve the effectiveness of Board meetings.
Going forward, we will encourage outside directors to be more
involved in formulating long-term visions and medium-termbusiness plans, and to promote discussions from a variety ofperspectives based on their experience and knowledge in theirareas of expertise. We also hope to reflect the opinions andperceptions of the public at large, including stakeholders, inour management.

Q10. Your company has been in business for nearly 150 years. In conclusion, please tell us about yourthoughts as President on what sustainability means to the Furukawa Company Group, cultivatedsince its foundation, and what is most important for the future.
Based on our Management Philosophy, we have remained a company that is needed by society, and we believe
this has been supported by the “people power” of our predecessors. We believe that developing human resources capable of responding flexibly to any social issue in today’s uncertain times will be the source of sustainable growth for the Furukawa Company Group.

“The Furukawa Company Group will remain indispensable tosociety by always embracing a spirit of challenge, advancing
the technologies that have underpinned the foundation ofsociety that originated in mining development.” This is ourManagement Philosophy. We demonstrate this philosophy bycontinuously evolving and developing our mining development
technologies, and we now offer products, technologies, andservices that society needs, especially in the Machinery andMaterials businesses.
In our nearly 150-year history, it has been our predecessors,
the officers and employees of the Group, who have taken responsibility for addressing changing business conditions. In thissense, we can say that the Group has been supported by “people power.” In recent years, technologies such as the Internetof Things (IoT) and artificial intelligence (AI) have brought
about dramatic changes, and we believe it will become evenmore important to integrate these technologies into ourmanufacturing, product development, and service functions.
“People power” will be key to connecting these technologies
and functions, and the Group’s officers and employees will
provide this important link. We expect times to change at anaccelerating pace in the future. This will highlight the increasing need to develop human resources who can anticipate suchsocial changes and have flexible ideas for addressing them. By
making larger investments in human capital than ever before,
we intend to achieve sustainable growth.
In closing, I will confirm that we will continue listening closely
to the voices of our stakeholders as we work together to improve the corporate value of the Group and remain a sustainable company in the years to come. We look forward to yourongoing understanding and support.

Annual Report 2022

9

E S G ESG Close-Up

Strengthening our sustainability promotion framework to meet the carbon neutral challenge
The Furukawa Company Group has established a newsustainability promotion framework to accelerate its
sustainability initiatives. In this section, Yoshiteru
Matsuo, General Manager of the Sustainability Promotion Department, discusses the Group’s basic approachto carbon neutrality and related initiatives.

General Manager
Sustainability Promotion Department

Yoshiteru Matsuo

Q1.

The Group established the new Sustainability Promotion Meeting in place of the CSR Promotion
Meeting. What was the purpose of the change and what is the Group’s definition of sustainability?

Since its establishment in 2013, the CSR Promotion Meeting has
been planning, promoting, guiding, and disclosing the Group’s
CSR activities in response to requests for disclosure of suchactivities and related non-financial information. After eight
years since its establishment, social background conditions havechanged significantly. In December 2021, therefore, we replaced
the CSR Promotion Meeting with the new Sustainability Promotion Meeting to accelerate sustainability activities based on ourmanagement strategy.
At the same time, we established the “The Furukawa Company
Group Basic Policy on Sustainability Initiatives.” The policy is basedon our belief that the Group’s commitment to sustainability is
one of its highest management priorities and will also help realize
a sustainable society. It clearly states that the Group will achievesustainable growth and increase its corporate value over the
medium to long term by building a growth-oriented managementfoundation and resolving social issues through its business.
In addition, we have defined “defensive” sustainability and“proactive” sustainability as initiatives to realize our basic
policy. “Defensive” sustainability means enhancing corporate
value by strengthening and expanding our enterprise risk
management system and engaging in business practices thatconsider the Group’s CSR/ESG issues, in order to build agrowth-oriented management foundation. “Proactive” sustainability means practicing “marketing-based management” thatincorporates CSV perspectives to enhance the value of the
Furukawa brand. It also means pursuing initiatives aimed atsimultaneously creating both corporate value and social value by
providing infrastructure development, products, technologies, andQ2.

services that help resolve social issues.
The Group’s concept of sustainability is to reduce risk andcapital costs through “defensive” sustainability while maximizing
business opportunities and improving profitability through“proactive” sustainability.

Furukawa Company Group’s
Approach to Sustainability

Sustainable growth and enhancing
medium- to long-term corporate value

Defensive
aspectEstablish a robust
corporate foundation
for growth(expansion andstrengthening of
non-financial capital)
Enhance corporate value
by emphasizing businesspractices that reflect CSR
and ESG issues

Reduce risk
(Reduce capital costs)

Proactive
aspectResolvesocial issues
throughbusiness
Contribute to the SDGs
through “marketing-based
management” thatincorporates CSV perspectives

Maximize opportunities(Improve profitability)

Strengthen and expand the enterprise risk management system

Furukawa Group’s Sustainability Tree

Along with establishing the Sustainability Promotion Meeting, you also reviewed the Group’s
sustainability promotion framework. Please tell us about the main changes and your thoughts on them.

The Sustainability Promotion Meeting gathers once a year, inprinciple, and is chaired by the president & representative director
with the Sustainability Promotion Department serving as the secretariat. It discusses various sustainability-related issues, including
formulating basic policies and action plans for the Group’s sustainability activities, developing a promotion framework, verifying andevaluating the status of activities, and implementing educationand public relations measures. This will enable us to clarify our
10 FURUKAWA CO., LTD.

responsibilities to our stakeholders and identify priority issues tobe addressed. We also have three committees and three dedicateddepartments that formulate and implement plans and measures tosolve sustainability-related issues while working proactively incooperation with the executive divisions to implement the PDCA cycle.
In addition, we are restructuring and expanding growth the Risk
Management Committee to strengthen our system for dealing
with increasingly diverse risks. With the Sustainability Promotion

E S G

Meeting and the Risk Management Committee functioning like
two wheels on a cart, it is now possible for management to become more engaged in risk management than ever before.

Q3.

initiatives on electricity are implemented at the Sakura Plant of the
UNIC Machinery segment and the Iwaki Plant of the Electronics
segment, we can reduce Scope 1 and 2 CO2 emissions by 46% ormore by 2030 under the current conditions. In addition,
we estimate that our forests, which we have owned from the timeof our mining operations, absorb 7,000–8,000 tons of CO2 peryear. To include this into a strict CO2 reduction plan, however,
we will need to various issues, such as engaging in more rigorous
forest management and obtaining certification for CO2 absorption. Another issue is the calculation of Scope 3 emissions. Scope 3,
which is divided into 15 categories with multiple different calculation methods, must be addressed. Due to the diversity of theGroup’s operations, we will analyze and evaluate each category to
determine how best to calculate our Scope 3 emissions.
We will work to resolve these issues by 2030 and contribute tocarbon neutrality by 2050 through CO2 absorption.

The recent revision of Japan’s Corporate Governance Code requires disclosure of information basedon recommendations of the TCFD or an equivalent framework. Please give us an overview of theframework adopted by the Group and what specific disclosure initiatives it is undertaking.

Regarding TCFD or equivalent disclosure, we will phase in our
disclosure through the framework of the Carbon Disclosure Project(CDP), which has been adopted by more than 13,000 companies,
representing 64% of the world’s market capitalization. At the endof July 2022, we completed our responses to the first set ofquestions. At the end of November of each year, the CDP notifies
each company about the results of its evaluations. We will analyze
the evaluation results for our company and make improvements,
then disclose our progress in our responses in the following year,
as well as on our corporate website and through disclosure tools, etc.
For items required by the TCFD, such as governance,

Q5.

This structure will enable us to address a wide range of potential
future sustainability-related risks in addition to conventional risks
related to business and natural disasters.

Companies are being asked to achieve carbon neutrality by 2050. Please tell us about the Group’s
approach to carbon neutrality, its implementation process, and specific initiatives you are taking.

At its gathering in May 2022, the Sustainability Promotion Meeting confirmed the Group’s basic approach toward carbon neutrality. It plans to complete its carbon neutrality roadmap by 2025,
based on the government’s targets of reducing CO2 emissions by
46% (relative to the 2013 level) by 2030 and achieving carbon
neutrality by 2050. Currently, we are working to reduce and rationalize power used by our plants and offices, which correspond to
Scope 1 and Scope 2. For the shortfall not covered by our own
reduction efforts, we will shift to solar power and electricity
derived from renewable energy sources. Ultimately, we estimatethat we can reduce CO2 emissions by around 80%. The remaining
20% of non-electricity sources, which include LNG, city gas, andlight kerosene, will be replaced by new technologies earmarked
for future development, such as hydrogen power. This willoffset the portion not covered by saving power and rationalization
through power conversion and our own efforts. Based on ourcurrent analysis, we believe that if the abovementioned

Q4.

C l o se - U pstrategy, risk management, and indicators/targets, we will disclose
our responses to the CDP in the TCFD framework and update it
every year.
Meanwhile, we have been selected for inclusion in the FTSE
Blossom Japan Sector Relative Index, which Japan’s Government
Pension Investment Fund (GPIF) uses to make investment
decisions. Our aim is to continue raising our ESG ranking andbecome a constituent of the FTSE Blossom Japan Index. We will
enhance the quality of disclosure in our future sustainability
reports by complying with FTSE survey criteria. In these ways,
we will actively disclose our ESG-related information, including
about efforts to become carbon neutral.

In conclusion, please tell us about the Group’s future challenges, measures, and prospects forbecoming carbon neutral.

Our difficult challenge is to understand Scope 3 emissions. In ourcase, many of our suppliers have very small operations, and it
would be very difficult to calculate the emissions of all of them.
Even if we adopt a simplified method of calculating CO2 emissions
based on the quantity of raw materials purchased, we will needto systemize our calculations because there are many types of raw
materials and many custom-made products in our supply chain.
We must discuss these issues in the future. Another challenge isthe accuracy of emissions. The Scope 3 category covers a diverse
range of CO2 emission sources. The inaccuracy of calculations
using simplified methods is also a problem to be addressed in the
future. By 2025, we hope to have an accurate understanding of
our Scope 3 CO2 emissions and a roadmap to 2030 and 2050.

There was a time in the Group’s history when developing
copper mines was prioritized as a national policy, but due topollution problems we faced a crisis and had to shut down our
copper mining operations. Our predecessors confronted thesechallenges head-on, developed new pollution prevention andby-product recovery technologies, and worked together with thecommunity and other stakeholders to find solutions. I believe
this experience has given us good DNA to address environmental
issues. Our campaign to achieve carbon neutrality and our efforts
to address major social and environmental issues are one and thesame. With our new sustainability promotion framework,
we will be more steadfast than ever in our quest to becomecarbon neutral.
Annual Report 2022

11

Review of Operations

Machinery
The Machinery business consists of three segments: Industrial Machinery (pumps, material machinery, infrastructure
division, etc.), Rock Drill Machinery (hydraulic breakers, hydraulic crawler drills, tunnel drill jumbos, etc.), andUNIC Machinery (UNIC cranes, mini-crawler cranes, UNIC carriers, etc.).

In fiscal 2022, sales of the Machinery business—consisting of theIndustrial Machinery, Rock Drill Machinery, and UNIC Machinery
segments—totaled ¥76,938 million, up 12.1% from the previous
fiscal year, while operating profit increased 17.9%, to ¥4,679 million. All three segments posted year-on-year sales increases, andthe Rock Drill Machinery segment returned to profitability, but
the Industrial Machinery and UNIC Machinery segments reported
declines in operating profit. The Machinery business accounted for
38.6% of consolidated net sales (down 4.3 points year on year)
and 60.5% of consolidated operating profit (down 10.5 points).
Of total sales of the Machinery business, the Industrial Machinery
segment accounted for 23.0% (down 1.3 points), the Rock Drill
Machinery segment 40.2% (up 5.0 points), and the UNIC Machinery segment 36.8% (down 3.7 points).
In the Machinery business, we recognize that the Group has aneven greater responsibility to fulfill, including disaster prevention
and disaster mitigation measures in Japan, as well as infrastructuredevelopment to build national resilience. We also realize that weface social challenges as a Group. These include contributing tosaving power and unmanned operation of construction sites tocompensate for labor shortages due to expected future declines in

the working-age population, as well as promoting energy
conservation and reduction of CO2 emissions. We will also work to
reinforce our earnings base in growing overseas markets, particularly in infrastructure and resource-related development.

% of Net Sales
38.6%

73.4

% of
Operating Profit
60.5%

77.5

50

5.0

0

82.6

20

68.6

6.5

76.9

10

7.3
3.9

4.6

'18/3 '19/3 '20/3 '21/3 '22/30

Note: Percentage figures are
before internal adjustments.

00.0%

機械事業
売 上 高
構 成 比

Concrete(Billions of yen)
Operating Profit (Right)
100

産業機械部門Priority Fields of the Machinery Business

Machinery Business

ロックドリル部門

ユニック部門

00.0%

00.0%

To mine for gravel and limestone, which are raw materials for concrete, we supply hydraulic crawler0 drills that are20used to drill 40
holes in rock, 60
in which gunpowder
is insert80
100
ed for blasting. We also have hydraulic breakers, which are used to break large rocks into small pieces, and crushers and screens, used at plants to achieve the desired rocksizes. These products contribute to demand for concrete in various areas.
産業機械部門 ロックドリル部門 ユニック部門
Hydraulic crawler drills

機械事業
営業利益
構 成 比

Crushes and cuts bedrock
into small pieces
Material for concrete andthe like

00.0%

0

20

Hydraulicbreakers
0

0.00%

40

00.0%

60

80

100

60

80

100

Crushers

20

40

Civil engineering and construction sites

Tunnel projects
We develop and manufacture tunnel drill jumbos, which are used to create openings for loading gunpowder needed for rock blasting in mountain tunnel projects.
We also develop and make belt conveyors for transporting large amounts of earthand sand, as well as shield pumps, which use water to pump excavated earth andsand in underground tunnel projects. Here, our drilling and wastewater treatment
technologies, amassed through mine development, come to the fore.

A single UNIC crane can transport and unload building materials and the like.
In addition to UNIC cranes, we offer mini-crawler cranes, which can operate
independently in places inaccessible by truck, and hydraulic crushers that play
0
20
60
80
100
a major roleat demolition
sites. Our40construction machines
featureexceptional
functionality, operability, and safety and are also environmentally friendly.

Mini-crawler cranes
Hydrauliccrushers

Tunnel drill jumbos
Belt conveyors

Shield pumps

12 FURUKAWA CO., LTD.

UNIC cranes

Industrial Machinery
Sales in the Industrial Machinery segment increased 6.2% year on year, to ¥17,723 million, and operating profit declined
33.9%, to ¥1,396 million.
Future Measures
As our basic strategy to establish a solid growth trajectory, we willcontinue “Increasing our involvement in section plant construction
projects and expanding our Infrastructure division, including largescale projects for both the public and private sectors,
in order to transition from a standalone machinery manufacturer,
strengthen our engineering capabilities*1, and enhance ourbusiness foundation in the domestic market.” With respect tostrengthening our engineering capabilities, our proprietary belt
conveyor transfer technology has been adopted in several largescale projects. In material machinery, we attracted orders forcrushers, screens, granulators, and some plant equipment throughtechnical proposals for section plant construction projects, andposted steady profits as a result. In the infrastructure division,
we will continue working to improve the accuracy and probability of winning orders by assuming unforeseen circumstances,
effectively managing risks, and rigorously managing projects. We
will also reinforce our earnings base by enhancing proposals forlong-distance flat-belt conveyors, which deliver better efficiency
and CO2 emission reduction when transporting earth and sand,and for our new SICON® environmentally friendly enclosed hanging belt conveyors, as well as by capturing renewal demand forpumps and material machinery.

Furukawa Industrial Machinery Systems Co., Ltd.
President and Representative Director

Kazuyoshi Iwama

Main Achievements● Received an order for our environmentally friendly SICON®

enclosed hanging belt conveyors for the Shin-Kobotoke
Tunnel on the Chuo Expressway● Developed a high-efficiency screen to underpin our
technical proposals for section plant construction projects● Received an order for a large pump plant project in thefluid equipment business, having expanded our sales
coverage to western Japan

Main Issues● Accelerate sales of displacement pumps (single screw*1 Engineering capabilities: The ability, as part of the sales process, to use
experience, technology, and knowledge as tools in order to make
optimal proposals to customers based on consideration of a comprehensive balance of all factors, including functions, costs, operating
environment, and safety.

pumps) that underwent a model change● Reinforce sales of steel structure products (steel segments)

other than steel bridges● Increase proposals for section plant construction

Main Products
Pumps
Our pumps have a history of more than 100 years since they were developed for wastewater treatment in mines. Our slurry pumps for transporting liquids containing solids and sewage pumps for sewage treatment are highly regarded for their
excellent durability and wear resistance. They are used in granulation water equipment in steel works, corrosion-resistant
and wear-resistant raw material transportation equipment in nonferrous smelters, drainage facilities at factories, and sewage treatment plants throughout Japan. They also pump earth and sand at underground shield tunnel construction sites.
Main Applications Drainage facilities of factories, sewage treatment plants, shield tunnel construction sites, etc.

Material machinery
With over 100 years of experience and a proven track record, our material machinery is used in quarries and mines
where crushed stone and limestone—raw materials for concrete that are essential for infrastructure development—aremined, as well as in various plants in the iron, chemical, and nonferrous metal industries. With a lineup that includes
crushers, grinding mills, briquetting machines, and screens, we not only make and sell machines but also designing,
manufacturing, and conducting installation work for certain parts of plants, including handling of peripheral processes.
Main Applications Quarries, limestone mines, steel works, smelters, cement plants, etc.

Infrastructure division
In the infrastructure division, we have built a track record of delivering steel structures, such as road bridges andhighway viaducts, mainly in the Tokyo Metropolitan Area. Our strength lies in our comprehensive capability to undertake all the process from the overall design of construction work to its execution and operation management. Recent
years have seen an increase in construction projects using belt conveyors, which realize speedy, environmentallyfriendly, safe, and secure conveying of earth and sand in place of dump trucks. We have earned a high level of trust
for our construction technology, which meets the requirements of river, mountain, urban, and other sites.
Main Applications New construction of steel bridges, construction of conveying earth and sand conveyanceprojects, disaster prevention and mitigation-related works, etc.

Annual Report 2022

13

Rock Drill Machinery
Sales in the Rock Drill Machinery segment increased 28.0% year on year, to ¥30,910 million, and operating profit totaled¥1,117 million, compared with an operating loss of ¥1,324 million in the previous fiscal year.
Future Measures
In the Rock Drill Machinery segment, our basic strategy is tostrengthen our Life Cycle Support (LCS) capabilities in order toexpand earnings in both the flow and stock businesses, reinforce
the profit base of our drill products (blast hole drills and tunnel
drill jumbos), and expand earnings by developing new markets
and launching new products. In October 2021, we reorganized
this segment, which posted an operating loss in the previous fiscal
year, after reviewing its management structure. Measures underway include clarifying our strategies by product and by region andreorganizing and consolidating overseas sales subsidiaries accordingly.
In the flow business, our most urgent issue is to strengthen andrebuild our overseas marketing capabilities, and we will rigorously
implement a policy of selection and concentration to achieve this.
First, as priority regions we will focus on Europe and theUnited States (where the functions and performance of ouroriginal products are highly evaluated) for hydraulic breakers andNorth America (where large machines are mainstream) and Southeast Asia (where the quarry market is developing) for hydrauliccrawler drills. Second, we will concentrate on sales of hydrauliccrawler drills by selecting models based on their superior functions. Seeking to develop the Southeast Asian quarry market, wedeveloped the AHD709, an attachment drill for use with hydraulicexcavators, and launched it in Indonesia in January 2022. In many
excavation sites, inexpensive pneumatic drills with significantly
inferior drilling capacity are the mainstream. At such sites,combining a hydraulic excavator with the AHD709 attachment
drill delivers high workability at an affordable price. In addition toIndonesia, we plan to market this product elsewhere in Southeast
Asia to promote the use of hydraulic drills. Third, we will review
our overseas structures and reorganize and consolidate overseas
sales subsidiaries in line with our priority regions.
In the stock business, we will promote LCS to strengthen our
hydraulic crawler drill business. In addition to improving theaccuracy of replacement demand forecasts, we will provide
various support programs that benefit our customers’ businesses.
These include maintenance programs, such as extended warranties and full maintenance packages, operating information
analyzes to improve work efficiency, and customer support
programs to propose reductions in consumables. Through such

Furukawa Rock Drill Co., Ltd.
President and Representative Director

Masahiro Ogino

support programs, we will reinforce our stock business andexpand sales of new machines and components.
With respect to tunnel drill jumbos, we will strengthen our
lineup of machines that help enhance safety and efficiency attunnel excavation sites. These include fully automatic drill jumbos
and automatic rock bolters, which we developed jointly with theTechnology Division. We will also continue addressing other issues
at mountain tunnel construction sites, including increasing the useof ICT and making sites unmanned.

Main Achievements● Developed an attachment drill for the Southeast Asian quarrymarket and launched it in Indonesia● Rebuilt our lineup of hydraulic crawler drills, centralized produc-tion of mainstay models, and began developing machines with
common parts to save costs● Stepped up development of high-value-added products fortunnel excavation sites, such as fully automatic drill jumbos andautomatic rock bolters● Restructured our domestic organization to concentrate salesof hydraulic crushers on the demolition market in theTokyo Metropolitan Area

Main Issues● Strengthen our overseas LCS service system (train drill

technicians and provide dealer support)● Devise ways to commercialize customer support services(leverage DX to promote shift from “product sales” to “service sales”)● Consolidate overseas sales companies (partially started)

Main Products
Hydraulic breakers
Hydraulic breakers, which contribute to infrastructure development at quarries, civil engineering and construction sites,
and the like, are attached to hydraulic excavators for excavating bedrock, breaking down rocks, crushing concrete structures, and so forth. In order to meet a variety of needs, we supply a wide range of products, ranging from small machines
for basic demolition to super large breakers for bedrock excavation, as well as environmentally friendly ultralow-noise
breakers. We supply hydraulic breakers with high quality and high impact force to customers all over the world.

Main Applications Strip mines such as quarries, civil engineering and construction sites, demolition sites, etc.

Hydraulic crawler drills
Hydraulic crawler drills are self-propelled machines for making downward holes in bedrock to load explosives forblasting. They are used at quarries, limestone mines, and other strip mines in Japan and overseas, as well as forroad and building leveling work overseas, where bedrock excavation projects are common. In recent years, we haveadopted an operational support system that utilizes IoT technology to prevent breakdowns before they occur. We arealso working to improve customer drilling operations and operational efficiency.

Main Applications Strip mines such as quarries and limestone mine, infrastructure work in overseas, etc.

Tunnel drill jumbos
This is machinery that drills hole into which explosives are inserted for blasting in mountain tunnel excavation sites.
Our machines have been used in most mountain tunnels for roads and railroads in Japan and are still active in theconstruction of long tunnels for the Linear Chuo Shinkansen, the new Hokkaido Shinkansen, and other projects. In
recent years, we have developed machines that automate the drilling process, which helps reduce the workload of
workers and realize safe, accurate, and efficient construction.

Main Applications Mountain tunnel construction sites, dam headrace construction sites, etc.
14 FURUKAWA CO., LTD.

UNIC Machinery
Sales in this segment increased 1.8% year on year, to ¥28,305 million, and operating profit declined 31.9%, to ¥2,165
million.
Future Measures
In the UNIC Machinery segment, our basic strategy is to securestable income from domestic sales and expand profit fromoverseas sales by promoting advanced functions and higher added
value in order to strengthen our competitiveness, while advancing
the stock business and reinforcing our overseas product, sales, service, and technological capabilities. In March 2022, we completed
a capital investment program that started in April 2016 aimed at
reinforcing the “mother factory” functions of our Sakura Works,
which has a three-pronged production system (Japan, China,
and Thailand). We are currently working to reform our hydraulicequipment manufacturing processes by consolidating processing
machinery in a newly established hydraulic equipment factory toenhance production efficiency. We are also reforming our coatingprocesses by installing cationic electrodeposition and other coating equipment to improve the quality of coating. In addition, we
will double our crane-mounting capacity and reform our bodymounting processes in order to reduce outsourcing costs andshorten delivery times to improve profitability.
In these ways, we are striving to maximize the benefits of ourcapital investments.
Seeking to further enhance competitiveness by increasing thefunctionality and added value of our UNIC cranes, in June 2021
we expanded the operating range of our “G-FORCE” series
and also launched the “New G-FORCE” series of medium-sizedtruck-mounted cranes that offer the highest lifting performance intheir class. In November 2021, we also began selling a new small
truck-mounted model. We will continue working to strengthen
our product competitiveness. Based on the concept of a“zero-emission crane,” for example, in September 2021 welaunched the URW295CB3RA, a maintenance-free, fully electricmini-crawler crane that can handle self-propelled operation inunderground and indoor locations where exhaust gas regulations
apply, as well as at sites where it is difficult to obtain an external
power source. In overseas business development, we will work toincrease profit from overseas sales by improving product competitiveness and stepping up support activities, such as sales andservice technical guidance for overseas dealers. We will also work
to raise the overseas sales ratio, which currently stands at around20%, while improving profitability. In light of recent market

Furukawa UNIC Corporation
President and Representative Director

Kenji Yamakawa

conditions, the domestic business environment remains difficult
due to delays in truck shipments and other factors, so we willclosely monitor trends among users and dealers. Overseas, we will
carefully address the impact of economic sanctions on Russia.

Main Achievements● Launched a new model (minor change) in the “G-FORCE”

series featuring improved lifting performance● Unveiled a fully electric mini-crawler crane equipped with amaintenance-free AGM battery● Introduced super-large UNIC cranes in China, where demand in highMain Issues● Develop flat-type model change machine for UNIC carriers● Review overseas dealers in regions with weak sales capabilities;

establish sales channel in unexplored regions● Provide support for overseas dealers in technical and sales

training, etc.
● Review overseas strategies, including in Russia where sales havebeen suspended● Reduce production costs and optimize parts procurement amidsoaring raw material prices

Main Products
UNIC cranes
These are saving power machines that enable a series of operations (hoisting, loading, transporting, and working)using a single truck. To meet customer needs, we have a wide range of models with various boom lengths and crane
capacities that can be mounted on all types of trucks, from small to large. We also have machines with advanced
features, including safety-oriented models, environmentally friendly models, and models with LCD radio controls tofacilitate complex operations. We boast a domestic market share of 50%.

Main Applications Civil engineering and construction sites, material handling, rental companies, etc.

Mini-crawler cranes
These are self-propelled cranes with compact bodies that are effective in confined spaces, rough ground, and indoor
work sites where trucks cannot enter. Our lineup ranges from a non-ride-on model that can be laid down on theback of small truck to a ride-on model with the world’s largest maximum lifting capacity of 10 tons. Recently,
we also developed a fully electric environmentally friendly model. Our machines are increasingly active both in Japanand overseas, especially in Europe and the United States.

Main Applications Narrow or rough ground, such as graveyards, indoor work sites, etc.

UNIC carriers
These are flat-type carriers that are mounted on trucks. To meet various applications, we have a wide range ofmodels that includes a dedicated vehicle-mounted model for transporting sports cars, a heavy equipment carrier fortransporting small excavators, and a model with a UNIC crane for loading and transporting broken-down vehicles
that cannot be driven on their own. Production of our UNIC carriers is outsourced to Furukawa Industrial Machinery
Systems Co., Ltd., a Group company.

Main Applications Car dealers, transportation companies, road construction companies, etc.
Annual Report 2022

15

Materials BusinessIn the fiscal year under review, total sales of the Materials
business (consisting of the Metals, Electronics, and Chemicals segments) increased 34.0% year on year, to ¥118,163
million, and operating profit jumped 125.7%, to ¥2,349
million. The Materials business accounted for 59.3% of
net sales and 30.4% of operating profit.

Materials Business% of Net Sales
59.3%(Billions of yen)
Operating Profit (Right)

118.1

120

% of
Operating Profit
30.4%

89.9 92.7
79.3

88.2
2.3

60

1.6

2

1.3
0.7

Note: Percentage figures are
before internal adjustments.

4

0

1.0

'18/3 '19/3 '20/3 '21/3 '22/3

0

MetalsSales in the Metals segment increased 35.4%, to ¥102,995 million, while operating profit
climbed 88.3%, to ¥940 million.
Future Measures
In the Metals segment, profits fluctuate significantly due to theimpact of international market trends and ore purchasing conditions, and determining the profitability and future potential of thecontracted copper smelting business is a priority issue. As detailed
in our news release on May 12, 2022, we decided to terminate
our contracted copper smelting contract with Onahama Smelting& Refining Co., Ltd. This will enable us to strategically lower the
scale of our operations and greatly reduce unprofitable exports
and thus stabilize profits from our contracted operations.

Furukawa Metals & Resources Co., Ltd.
President and Representative Director

Masanori Saito
Main Achievements● Decided to terminate our copper smelting contract

with
Onahama Smelting & Refining, effective March 31, 2023,
which will lead to drastic reductions of unprofitable exports
thereafter

Main Issues● Need to ensure supplies to some customers (for a certain period

during/after fiscal 2024) after termination of copper smelting
contract with Onahama Smelting & Refining● Fluctuations in profitability due to international market trends
and ore purchasing conditions (fluctuations will decrease in
fiscal 2023 and beyond compared to fiscal 2022 due to lower
production volume)
Main Applications
Electrolytic copper: Electric wires, copper elongation products,
Electrolytic copper

Gibraltar Copper Mine in Canada

home appliances, communications equipment,
automobiles, etc.

Electronics
In the Electronics segment, sales increased 26.7%, to ¥7,271 million, and operating profit
surged 312.5%, to ¥666 million.
Future Measures
Our basic strategy going forward is to promote growth and newmarket launches of aluminum nitride and diffractive opticalelements (DOEs), which are strategic products. In aluminum
nitride, demand for heat-dissipating components is growing
due to advances in integration, miniaturization, and thinning ofelectronic devices. Here, we will utilize our high-value-added firing

16 FURUKAWA CO., LTD.

Furukawa Denshi Co., Ltd.
President and Representative Director

Hitoshi Iidatechnology to target business expansion while developing aluminum
nitride with high levels of thermal conductivity and toughness.
In DOEs, we will deploy our microfabrication technology to expand
sales channels.

Main Achievements● Decided to invest approximately ¥900 million to increase

production of aluminum nitride, for which demand is strong,by the end of fiscal 2022
● Developed and launched a high-performance aluminum nitride
with greater thermal conductivity than existing products.
● Increased sales of DOEs for laser processing

Main Issues● Consider secondary and tertiary investments to increase pro-duction in anticipation of further growth in demand foraluminum nitride● Develop DOEs for applications other than laser processing

Main Applications
High-purity metallic arsenic: PCs, smartphones, infrared luminous		parts, red LDs /LEDs, etc.
Aluminum nitride: Semiconductor manufacturing equip		ment components, high-power LEDs,
		resin-based heat-dissipation sheets, etc.
High-purity metallic arsenide

Aluminum nitride

Chemicals
Sales in the Chemicals segment increased 24.0%, to ¥7,896 million, and operating profit
jumped 95.6%, to ¥743 million.
Future Measures
In the Chemicals segment, our basic strategy is to expand profit
from existing products, such as sulfuric acid and cupric oxide,
while commercializing and fostering newly developed products,
such as metallic copper powder. In sulfuric acid, we will further
differentiate ourselves through our high-quality offerings, forwhich demand is growing, especially for battery applications. We
will also increase production of cupric oxide for plating, for whichsales are growing for use in high-end PCs and servers. In metallic
copper powder, we will enhance product quality, establish mass
production and sales systems, and develop attractive productsamples to expand sales channels.

Furukawa Chemicals Co., Ltd.
President and Representative Director

Shin Imai

Main Achievements● Increase in sales of high-quality sulfuric acid, mainly for battery

applications● Growth in sales of cupric oxide for plating in high-end PCs and servers

Main Issues● Significant delays in sales of metallic copper powder, for whichsamples are being developed, due to the COVID-19 pandemic● Delays in reflecting raw material prices, which are surging, in

our product prices
Main Applications
Sulfuric acid and derivatives: Chemicals, electronic devices, steel,food processing, and other industries,
as well as water and sewage, etc.
Cuprous/cupric oxide: Ship-bottom paints, printed circuitboards, etc.

Sulfuric acid production plant

Cupric oxide

Real Estate
Sales in the Real Estate business edged up 0.4%, to ¥2,115 million, and operating profit increased 0.9%, to ¥743 million

Future Measures
Looking ahead, our basic strategy is to continue making effective
use of real estate owned by the Group, including the Furukawa
Osaka Building, while securing stable profit from the Muromachi
Furukawa Mitsui Building (commercial name: COREDO Muromachi
2). Another challenge is to decide our future plan for the site of the
Furukawa Osaka Building, which closed at the end of December
2019. (Demolition of that building began in fiscal 2021.)
Muromachi Furukawa Mitsui Building(commercial name: COREDO Muromachi 2)
Annual Report 2022

17

T O P I C S

Structural Reform of Metals Segment
Fundamental overhaul of contracted copper smelting businesswith the termination of smelting contract with Onahama Smelting
and Refining Co., Ltd.

Site of Onahama Smelting & Refining

Termination of copper smelting contract with
Onahama Smelting and Refining Co., Ltd.
In May 2022, the Company decided to terminate the copper
smelting contract between Furukawa Metals & Resources Co.,
Ltd., which handles the Group’s Metals segment, and Onahama
Smelting and Refining Co., Ltd., effective March 31, 2023. It wasa management decision to fundamentally review the contracted
copper smelting business of the Metals segment, which has
been a priority issue, and improve the segment’s profit structure
following continuous operating losses in real terms (excluding
metal price fluctuations), with the ultimate aim of making thebusiness profitable. As a result, the Group’s annual copper
production will decrease by approximately 34% (around 24,000tons). Despite the decline in sales, we expect segment operating
profit to improve due to a significant reduction in unprofitable
exports, allowing the segment to return profitability.

in environmental measures and maintenance and renewal of aging facilities, while their electricity, fuel, and other operating costs
are soaring. Accordingly, contracted smelting costs and SG&A
expenses remain consistently high (Chart 1-❷).
The result has been a normalized “reverse spread” situation,
where contracted smelting costs exceed TC/RCs, causing
operating profit in real terms (excluding metal price fluctuations)
to remain negative. (Table 1)

Securing profitability in the Metals segment

The revenue source for a smelting company is the treatment andrefining charges (TC/RCs) it receives from the mining company
based on ore purchasing conditions. Furukawa Metals &Resources Co., Ltd. pays smelting fees to two contractors:
Onahama Smelting and Refining Co., Ltd. and Hibi Kyodo Smelting Co., Ltd. If the TC/RCs are attractive, the difference between
it and the contracted smelting cost will result in a profit. In recent
years, however, the supply–demand balance has been consistently
unfavorable to smelters due to strong demand from China, which
has grown rapidly, as well as the slow increase in copper concentrate supply relative to the speed of smelting capacity expansion.
Moreover, TC/RCs (Cart 1-❶) are unlikely to improve significantlyin the future, as domestic smelters are making significant investments

As our founding business, the Metals segment has been thecornerstone of the Group’s development. As mentioned above,
however, it has been in a constant deficit structure. Accordingly,
we decided to undertake a fundamental review to improve thesegment’s profit structure and return it to profitability. With ourdecision, we will reduce unprofitable exports and focus on domestic sales, thereby securing segment operating profit and reducing
the volatility range of earnings due to price fluctuations.
For the Metals segment, our fiscal 2023 forecasts (as of May
12, 2022) are sales of ¥110.7 billion and operating profit of ¥0billion (assuming a copper price of US$9,400/ton and an exchange
rate of ¥120/US$) ( as of May 12, 2022). After terminating thecontract with Onahama Smelting & Refining Co., Ltd., however,
we estimate segment sales of ¥70.7 billion and operating profit of ¥0.4 billion. This means the segment will be profitable inreal terms (excluding metal price fluctuations). Furthermore, thesegment’s operating margin and ROA (return on assets) are also
expected to improve.
Going forward, we will fulfill our responsibility to supply existing
domestic customers by continuing our contract with Hibi Kyodo
Smelting Co., Ltd.

Chart 1: Profit Structure of Contracted Copper
Smelting Business

Table 1: Operating Profit, etc., in the Metals
Business(Hundred millions of yen)

Profit structure deteriorating year by year

Sales
Smelting
company
revenue

Miningcompany
revenueRawmaterial costSales
premiums
TC/RC

LME
electrolytic
copper price

18 FURUKAWA CO., LTD.

Profit❶RisingLow level❷Rawmaterial
cost

SG&A expenses
Contracted
smelting costs

Turning to
loss

Costs

FY2019FY2020

FY2021

FY2022

Operating profit

5.8

3.0

4.9

9.4

(Portion affectedby copper price)

2.6

5.0

15.1

15.1

Operating proit(loss)
based on actual
performance

3.1

(1.9)

(10.1)(5.7)

Copper price(US$/mt)

6,341

5,860

6,879

9,691

Exchange rate (¥/
US$)

110.9

108.7

106.1

112.4

Environment

ESG Information

S o c ie t yGovernance

The Furukawa Company Group’s ESG Activities
Since its founding in 1875, the Furukawa Company Group has worked diligently to resolve a number of issues, including
the emergence of pollution at the Ashio Copper Mine. The experiences and efforts of our early pioneers have paved theway for our approach to ESG and the Sustainable Development Goals (SDGs) today. Promoting an integrated thinking
that combines our business and sustainability activities ensures that we carry on the DNA cultivated by our pioneers.
At the same time, it enables us to realize a sustainable society and continue advancing as a company.

Remaining a Company That Is Indispensable toSociety
Under its long-term Vision for 2025, the Group is working toincrease the value of the Furukawa brand through “marketingbased management” that incorporates CSV perspectives.”
The vision also clarifies our commitment to “increase corporate
value by emphasizing business practices that reflect CSR and ESG
issues recognized and to be solved by the Group.” By promoting
an integrated thinking that combines our business and sustainability activities, we will work to create social value and corporate
value by helping resolve various social issues faced by stakeholders. These include achieving the SDGs, the need to build national
resilience in Japan, and a declining working-age population.

Framework for Promoting Sustainability
In December 2021, the Group reorganized its CSR Promotion
Meeting, which had been established in Furukawa Co., Ltd., inorder to vigorously promote CSR initiatives, into the Sustainability
Promotion Meeting to strengthen its sustainability initiatives.
By implementing this reorganization, the Group is actively working
to resolve issues related to sustainability by clarifying its responsibilities to its stakeholders and identifying priority issues that need
to be addressed to realize “The Furukawa Company Group Basic
Policy on Sustainability Initiatives.”
The Sustainability Promotion Meeting convenes annually as a
Sustainability Promotion Structure

Relationships with Stakeholders

Board of Directors /President & Representative Director
Instruction

Reporting

Sustainability Promotion Meeting
Comprehensive deliberations onsustainability and CSR

Interaction

Risk Management Committee
Comprehensive deliberations
on enterprise risk

Sustainability Promotion Department(Secretariat)
Compliance Committee
Environmental & Safety
Management Committee
Quality Assurance Committee
Sustainability Promotion Department
Human Resources &General Affairs Department
Purchasing Department
Instruction

Reporting Interaction

Implementation Bodies (PDCA Cycle)
Furukawa Co., Ltd. Relevant DepartmentsCore Operating
Companies

rule with the President & Representative Director as the Chairperson
and the Sustainability Promotion Department as its Secretariat. The
meeting deliberates on a variety of sustainability and CSR issues,
including formulation of basic policy and action plans for theGroup’s sustainability and CSR activities, establishment of promotion framework, verification and evaluation of the status of activities, education and public information measures, and so on.
Other serving members of the Sustainability Promotion Meetingare the Company’s directors and the president of each core operatingcompany as well as the chairperson of the Compliance Committee,
the Environmental & Safety Management Committee, and the
Quality Assurance Committee, which are the Company’s organizations, together with the heads of the Company’s Sustainability
Promotion Department, Human Resources & General Affairs
Department, and Purchasing Department. The members consider
the substance of deliberations and matters raised during the meeting and take steps to coordinate with the Group companies anddepartments that are the implementation bodies for sustainability
and CSR activities, implementing the PDCA cycles of planning,
execution, evaluation, and improvement.
They also coordinate with the new Risk Management Committee, which is the organization that engages in the enterprise risk
management system. This committee replaces the previous Risk
Management Committee, which was disbanded in December 2021.
We will continue to improve these frameworks for reducing risk andmaximizing opportunity in Group businesses.

Furukawa Industrial Machinery
Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Metals & Resources
Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

In the course of strengthening our sustainability initiatives andimplementing our Management Philosophy, we have identified our
stakeholders as follows: customers, business partners, shareholders
and investors, employees, local communities, and the global environment. Moreover, we aim to build relationships of trust and accordingly maximize our corporate value by engaging in appropriate
communications that involve clearly conveying our responsibilities toeach group of stakeholders.
Stakeholders

Responsibilities

Customers

We shall provide customers with safe, high-quality products
and services in order to increase satisfaction levels.

Business
partners

We shall build and maintain mutually beneficial relationships
conducive to harmonious coexistence through stableprocurement activities based on the principles of fairness
and economic rationality.

Shareholders
and investors

We shall work to maximize corporate value through communications focusing on timely and appropriate information
disclosure and IR activities.

Employees

We shall create safe, healthy, and motivating workplaces inwhich our diversified human resources can excel while
adopting appropriate evaluation standards and fair incentives.

Local
communities

We shall build and maintain favorable relationships of trust
by pursuing social contribution activities aimed at harmonious coexistence with local communities.

Globalenvironment

We shall protect biodiversity by developing environmentallyfriendly technologies and products while minimizing theenvironmental impact of our activities through savings ofenergy and resources and reduction of waste.

Annual Report 2022

19

The Furukawa Company Group’s ESG Activities

CSR/ESG Issues
One policy as part of our Vision for 2025 states our commitment to “increase corporate value by emphasizing businesspractices that reflect CSR and ESG issues recognized and to be solved by the Group” as a core foundation of management. We also clarified the relationship between ESG, CSR priority issues, medium-term CSR goals (fiscal 2021–2023),
and relevant major SDGs.

Identifying CSR Priority Issues
The Group has identified priority issues and is strengthening its
CSR activities to ensure that its business operations contributeto society. To identify CSR priority issues, we selected important
CSR-related issues from the perspectives of both stakeholders andthe Group, then analyzed and evaluated the importance of thoseissues and finalized the Group’s CSR priority issues.

stepping up CSR-related efforts through the PDCA cycle. Throughthese initiatives, we aim to help accomplish the SDGs, which wereunanimously adopted by the United Nations for achievement
around the world by 2030.

Establishing a Robust Management Foundation:
Increase corporate value by emphasizing business practices that reflect CSR and ESG issues
recognized and to be solved by the Group

Steps to Identify CSR Priority Issues
Extract issues
Evaluate importance to stakeholders and the GroupIn order to pursue its business activities and fulfill its corporatesocial responsibility, the Group has identified CSR priority issues,
formulated medium-term CSR goals to resolve these issues, and isAnalyze the importance of issues
Decide and approve priority issues

CSR Priority Issues and Medium-Term CSR Goals Classified by ESG Section
ESG Section

CSR Priority Issues

Medium–Term CSR Goals (FY2021–2023)

Promote continuous improvements in environmental performance(CO2, water resources, waste, chemical substances)● Strengthen management of progress toward the Fourth MediumTerm Reduction Targets● Promote activities for achievement of carbon neutrality● Strengthen efforts to achieve zero accidents/disasters● Promote biodiversity protection activities (ecosystem conservation,
restoration of flora and fauna, etc.)●

E(Environment)

Promoteenvironmental
protection activities

Strengthen management of changes aimed at improving
product quality● Strengthen education and information management to raiseawareness about quality●

Offer products andservices that satisfy
customers

S(Society)

Build fair andimpartial business
relationships andrelationships ofreciprocal trustwith business
partners
Promote social
contribution
activities
Realize comfortableworkingenvironments for
employees andgive them fairevaluation andtreatment
Build a meticulous
group governancesystemG(Governance)

Communicate withshareholders andother investors●

Strengthen quality assurance management●

Review and improve product safety evaluation system

Build CSR-oriented procurement system
Strengthen supplier management● Strengthen internal CSR activities●●

Promote social contribution activities aimed at coexistencewith local communities● Maintain and build good relationships of trust with local communities●

Develop talented human resources
Promote health management● Promote diversity● Improve working environments●●●

Ensure timely and appropriate information disclosure
Increase corporate value through communication via IR● Strengthen the IR system●●

Strengthen awareness-raising education to entrench compliance
Thoroughly disseminate the Charter of Corporate Conduct andthe Code of Conduct for Officers and Employees● Develop and expand various guidelines and manuals● Entrench timely and appropriate reporting of compliance violations●

Strengthen
compliance

20 FURUKAWA CO., LTD.

Establish enterprise risk management system●

Major Related SDGs

Environment

S o c ie t yGovernance“Marketing-Based Management” That Incorporates CSV Perspectives
The Group will generate “corporate value” by providing infrastructure, products, technologies, and services that help
resolve social issues, while at the same time striving to create “social value.” Of the 17 SDGs, we are focusing particularattention on achieving Goal 11 (“Make cities and human settlements inclusive, safe, resilient and sustainable”) and Goal
9 (“Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”). We will
also strive to create “social value” by building social infrastructure as stated in “The Furukawa Company Group’s Value
Creation Process” (please see pages 2–3), while realizing a safe, environmentally friendly, and prosperous society.

Deploying “Marketing-Based Management” That Incorporates CSV Perspectives to Address the SDGs
“social value” by improving social infrastructure and realizing asafe, environmentally friendly, and prosperous society. In theseways, we will help achieve the SDGs.

The Furukawa Company Group practices “marketing-based
management” that incorporates CSV perspectives and creates

SDG Contribution Targets by Segment

SDGs with High Contribution Levels ( ◎ : Especially Important; 〇 : Important)
Main Products, Technologies,
and Services

ChemicalsElectronics

Metals

UNIC
Machinery

Rock Drill
Machinery

Industrial
MachinerySegment

Pumps○

Belt conveyors Steel bridges
and steelstructures

Tunnel drill
jumbosHydrauliccrawler drills

Hydrauliccrushers

UNIC cranes

Mini-crawler
cranes

Ocean cranes

◎

◎

◎

○

◎

◎

○

◎

◎

◎

◎

◎

◎

◎

◎

○

○

◎

○

◎

Electrolytic
copperHigh-purity
Coils
metallic arsenide

Opticalcomponents(lenses)

Sulfuric acid

Ferrous sulfate○○
Aluminumsulphate○

Example of “Marketing-Based Management” That
Incorporates CSV Perspectives
Contributing to the development of social infrastructure with belt
conveyors that excel in efficiency and environmental performance
In Japan, there is a growing need to address various social issues,
such as disaster prevention and mitigation, national resilience, theenvironment, and a shrinking workforce. In our Industrial Machinery segment, we are developing belt conveyors to help resolve
those social issues. Generally, dump trucks are used to transport
earth and sand, but in recent years more and more contractors are
instead using belt conveyors to shorten the construction period
and to protect the surrounding environment. A good example ofthis is a relocation project undertaken as part of the Great East
Japan Earthquake reconstruction initiative. If a 10-ton dump truck
were used to transport earth and sand, this project would havetaken nine years, but using belt conveyors shortened that time toaround three years. Compared with dump trucks, moreover, belt
conveyors emit almost no CO2. Accordingly, they are recognized◎

as an efficient and environmentally friendly way to transport earthand sand.
In another project, the construction of a regulating pond forriver flood control, SICON® enclosed hanging belt conveyors,which transport earth and sand in sealed bags, was used to minimize spills, dust, noise, and vibration. The conveyor also demonstrated excellent environmental and safety characteristics, which isimportant because the project was located adjacent to a residential area.
https://www.furukawakk.co.jp/kiaikinniku/movie/belt_conveyor/

Belt conveyors help resolve social
issuesAnnual Report 2022

21

The Furukawa Company Group’s ESG Activities

Corporate Governance
The Group maintains fundamental policies regarding corporate governance with respect to heightening managerialtransparency, building an effective managerial framework through ongoing efforts to transform its corporate structure,
increasing its corporate value by generating consistent profits, and contributing to its shareholders and otherstakeholders. Under these policies, each of the Group’s operating companies assumes clear asset and profitability
management responsibilities while maintaining unity as a Group. We aim to promote agile management and provide
products and services that satisfy our customers and maximize the corporate value of the entire Group.

Overview of Corporate Governance System andReasons for Its Adoption

Nomination & Remuneration Committee
The Nomination & Remuneration Committee serves as an optional
advisory body to the Board of Directors. It receives requests foradvice from the Board of Directors regarding candidates for Directors and Audit & Supervisory Board Members, as well as selection
and dismissal of Representative Directors and Executive Directors
and remuneration for Directors, then deliberates and reports asnecessary. The majority of the Committee’s members are Outside
Independent Directors, and the Committee is chaired by an
Outside Independent Director, thereby ensuring independence.
The Committee met four times between October 2021 and May
2022. It consists of the following five members.

The Company employs a company system with a Board of
Directors and an Audit & Supervisory Board to supervise businessexecution. In addition, we have appointed Outside Directors toensure the validity of decision-making and the objectivity andtransparency of management. The Audit & Supervisory Board
Members are managers of other companies and persons withknowledge of financial accounting, who use their specialized
knowledge and experience to give advice to management andcheck the status of operations. We consider that management
oversight is functioning effectively under the current system.
Directors and Board of Directors
The Board of Directors, chaired by Chairperson and Representative Director Naohisa Miyakawa, holds regular meetings once amonth, and extraordinary meetings as necessary and supervises
the business execution of the entire Group as a supervising body.
The Board consists of nine members as of June 29, 2022, including three Outside Directors.

Chairman: Tatsuya Tejima, Outside Director		(attended all four meetings)
Member: Yoichi Mukae, Outside Director		(attended all four meetings)
Member: Kazumi Nishino, Outside Director		(attended all four meetings)
Member: Naohisa Miyakawa, Chairperson and Representative		
Director (attended all four meetings)
Member: Minoru Nakatogawa, President and Representative		
Director (attended all four meetings)

Corporate Governance System
Shareholders’ Meeting
Election and Dismissal

Election and Dismissal

Board of Directors

Auditsnine directors(including three outside directors)
Advisory

Election and Dismissal

Audit & Supervisory Board

four members(including two outside members)

Cooperation

Accounting Auditor

ReportNomination &Remuneration Committee

Oversees

Reports

Reports

AuditsRepresentative Director

Reports

Management Council

Internal Audit Department

Accounting Dept., others
Sustainability Promotion
Meeting

Risk Management
Committee

Executive Officers(13 persons)

Relevant Company divisions/departments/offices and Group companies

22 FURUKAWA CO., LTD.

Audits＜Internal Control Division＞＜Management＞

Management Committee

Cooperation

AuditsCooperation

Environment

Executive Officer System
The Company employs an Executive Officer System, which facilitates
quicker decision-making, and defined responsibilities in terms of keeping
management supervisory functions separate from executive functions.
Executive Officers perform their tasks according to business plans
determined by the Board of Directors, and report the status of businessexecution as appropriate to the Board of Directors and the Management
Committee. The Company has 13 Executive Officers as of June 29, 2022,
including two serving concurrently as Directors.
Management Council
The Management Council consists of all full-time directors of theCompany and is chaired by Minoru Nakatogawa, President andRepresentative Director. The Council makes decisions on basic
management policies, strategic planning, and important mattersof the Group. Full-time Audit & Supervisory Board Members may
attend Management Council meetings and express their opinions.
Important matters pertaining to each company in the Group are
submitted to the Board of Directors after decisions of the respective Group companies have been made. Of the important matterssubmitted to the Management Council, those of managerial
importance in terms of magnitude and content are also submitted
to the Board of Directors for decision.
Management Committee
The Management Committee consists of internal directors andinternal Audit & Supervisory Board Members, as well as executive
officers, general managers of business divisions, managers of
departments not attached to business divisions (excluding generalmanager of the Secretary Department), and the presidents ofcore Group operating companies (Furukawa Industrial Machinery
Systems Co., Ltd., Furukawa Rock Drill Co., Ltd., Furukawa UNIC
Corporation, Furukawa Metals & Resources Co., Ltd., Furukawa
Denshi Co., Ltd., and Furukawa Chemicals Co., Ltd.). The Committee is chaired by Minoru Nakatogawa, President and Representative Director, and meets monthly. The Management Committee
reports on the execution of business by the Company and its core
operating companies, examines them, and gives instructions.
Audit & Supervisory Board and Its Members
The Audit & Supervisory Board consists of four members (two full-timeand two outside) as of June 29, 2022 and is chaired by Minoru Iwata, afull-time member. It meets from time to time to make decisions on audit
policies, business decisions, methods of investigating the status of assets,
and other matters related to the execution of duties by Audit & Supervisory Board Members. The Company has appointed one supplementary
Audit & Supervisory Board Member (pursuant to Article 329, Paragraph
3 of the Companies Act) in case the number of members stipulated inlaws and regulations falls short. The appointment of supplementary
Audit & Supervisory Board Members shall be effective until the beginning of the Ordinary Shareholders’ Meeting relating to the last fiscal year
ending within four (4) years after the appointment’s resolution. In theevent that a supplementary member assumes office as an Audit &Supervisory Board Member, the term of office shall be until the
expiration of the term of the retiring member.

Status of Internal Audits and Audits by the
Accounting Auditor and Audit & Supervisory
Board Members
We established the Internal Audit Department as an internal
auditing organization. The Department has five members andconducts audits on the status of management and business execution in the Group’s overall operating activities. In accordance withthe audit policy determined by the Audit & Supervisory Board,
members of that board attend meetings of the Board of Directors, Management Council, Management Committee, and otherimportant bodies. At those meetings, Audit & Supervisory Board

S o c ie t yGovernanceMembers audit the execution of duties by directors by listening tobusiness reports from directors and others, and by investigating
business offices and subsidiaries. The Company has appointed
Ernst & Young ShinNihon LLC as its accounting auditor. There isno conflict of interest between the Company and the accounting
auditor or the managing partners of the accounting auditor who
engage in audits of the Company. Audit & Supervisory Board
Members work closely with the accounting auditor as part of theCompany’s audit policy. At the beginning of each fiscal year, theCompany receives an explanation of the annual audit plan fromthe accounting auditor and prepares an audit plan for Audit &Supervisory Board Members. Audit & Supervisory Board Members
also receive explanations of the audit results from the accounting
auditor regarding the settlement of accounts for the fiscal year
and request reports from time to time. In addition, they work
closely with the Internal Audit Department, receiving reports on
the results of internal audits. The Internal Audit Department andthe accounting auditor also exchange opinions and information
as needed.

Evaluating the Effectiveness of the Board of
Directors
To analyze and evaluate the effectiveness of the Board of Directors, the Company conducts questionnaire-based surveys of
Directors and Audit & Supervisory Board Members and exchanges
opinions with Outside Officers. The results of these activities arereported to the Board of Directors, which analyzes the current
situation and discusses future initiatives.
The Board of Directors met to analyze and evaluate responses
to the questionnaire regarding the Board of Directors conductedin fiscal 2022 and confirmed the following three points.
(1) While the overall average of evaluations remained unchanged
from the previous fiscal year, items assessing the effectivefunctioning of the Board of Directors showed year-on-year
improvement.
(2) The tendency to spend time on individual agenda items ischanging to requests for opportunities for a more free andvigorous exchange of opinions.
(3) Factory inspections by Outside Officers could not be carried out
due to the COVID-19 pandemic (as in the previous fiscal year),which is an ongoing issue.
In addition, we recognized the need to address the following
four issues in order to make further improvements.
(1) In order to exchange opinions freely and usefully regarding
the major direction of management, the Company shall
increase opportunities to explain and report on the current
situation and issues of the Group more than before.
(2) The Company shall provide various data, including earnings
data, in a form that executives can access at any time to enhance the provision of information when considering mattersto be discussed at Board of Directors’ meetings.
(3) The Company shall ensure appropriate and effective reportingof the “Status of Dialogue with Shareholders (Investors)”
to further invigorate the Board of Directors through discussions based on diverse opinions, including those from theperspective of shareholders (investors).
(4) The Company shall continue conducting factory tours for
Outside Officers and explain the current status of Group companies to further expand information-sharing on the businessof each Group company.
In addition to these efforts, we will strive to further improvethe effectiveness of the Board of Directors by enhancing thequality of discussions at Board meetings through timely information-sharing and enhancement of meeting materials.
Annual Report 2022

23

The Furukawa Company Group’s ESG Activities

Independence of Outside Directors and Outside
Audit & Supervisory Board Members
The Company appoints Outside Directors and Outside Audit &Supervisory Board Members with abundant experience and expertise in various fields, as well as impartial perspectives. This is toensure the appropriateness of the Company’s management
decisions and the effectiveness of oversight and audits of management.
As of June 29, 2022, the Company has three Outside Directors
and two Outside Audit & Supervisory Board Members.
In addition, the Company stipulates that Outside Officers (Outside Directors and Outside Audit & Supervisory Board Members,
including candidates) do not fall under the following criteria
concerning independence. Outside Officers who meet such
criteria are designated and registered as Independent Directors/
Auditors under the rules of the Tokyo Stock Exchange. As of June29, 2022, the Company has four Independent Officers.
Independence Standards for Outside Officers(Must not meet the following criteria)(1) Executive Directors, and employees of the Group(2) Business partners of the Group (those who provide products
		 or services mainly to the Group and whose transactions with		 the Group were equivalent to more than 2% of net sales of		 the business partners in the most recent fiscal year of such		 business partners) or executives of such business partners(3) Main business partners of the Group (those who are provided
		 products or services by the Group and whose transactions with		 the Group were equivalent to more than 2% of net sales of		 the Group in the most recent fiscal year of the Group) or		 executives of such business partners(4) Executives of financial institutions that are major lenders to		 the Group (lenders whose loan amounts were equivalent to		 more than 2% of the Group’s consolidated total assets at the		 most recent fiscal year-end)(5) Individuals earning ¥10 million or more per year from the		 Group in monetary or other benefits as specialists (including
		 consultants, accountants, and lawyers) excluding executive
		 remuneration, or individuals employed by companies earning		 ¥100 million or more per year from the Group(6) Individual shareholders who hold 10% or more of the		 Company’s voting rights (or Executive Directors, Executive
		 Officers, or employees of corporations that hold 10% or more		 of the Company’s voting rights)(7) Individuals who had fallen under (1) to (6) above in the past		 three-year period(8) Relatives (second degree or closer) of persons who fall under		 (1) to (7) above

Remuneration for Directors and Audit & Supervisory Board Members
The Company has established the following policies for determining the content of remuneration for each individual director as
follows.
(1) Basic policies
		 - The remuneration system for directors shall function soundly		 as an incentive for the sustainable enhancement of corporate
		 value, and the amount of remuneration for each individual
		 director (hereinafter, “individual remuneration”) shall be		 determined appropriately according to the responsibilities
		 of each position.

24 FURUKAWA CO., LTD.

		 - Remuneration for Executive Directors shall consist of basic
		 remuneration, additional remuneration for directors, addition		 al remuneration for Representative Directors, and stock-based
		 remuneration. Outside Directors who are responsible for		 supervisory functions shall be paid only a certain amount of		 basic remuneration in consideration of their duties, and all		 remuneration for directors shall be paid monthly in monetary		form.
(2) Policies for determining individual remuneration
		 - Individual remuneration amounts shall be determined in		 accordance with the remuneration standards for directors,
		 taking into consideration the position, responsibilities, trends
		 at other companies, and salary levels of employees, as well as		 business performance and other factors.
		 - With respect to remuneration for Executive Directors, 10%
		 of basic remuneration shall be performance-linked, and 90%
		 (additional remuneration for directors, additional remunera		tion for Representative Directors, and stock acquisition type		remuneration) shall be fixed.
		 - For stock-based remuneration, contributions to the Executive
		 Shareholding Association are obligatory as a medium- to long		 term incentive.
(3) Policies for determining the calculation method, etc., of per		formance-linked remuneration
		 - Regarding basic remuneration for Executive Directors,
		 consolidated operating profit shall be used as a performance		 indicator in order to link remuneration to short-term business		 performance and raise awareness of the need to improve such		 performance each fiscal year.
		 - In principle, performance-linked remuneration for Executive
		 Directors shall be a sum equal to the basic performance-linked
		 remuneration amount multiplied by 0–2, depending on the
		 degree of achievement of the performance index against
		 initially announced targets. However, if natural disasters
		 or special circumstances have a significant impact on the		 achievement of performance indicators, the Nomination &		 Remuneration Committee may take such impact into consider		 ation after deliberation.
(4) Policies for determining payment ratio for each type in
		 individual remuneration
		 - Regarding remuneration of the Executive Directors, the basic
		 remuneration, which is performance-linked, shall account for		 around 8% of the total, and the rest shall be fixed.
		 - Stock-based remuneration shall be around 10–15% of total
		 remuneration for Executive Directors.
(5) Matters concerning the method of determining the content
		 of individual remuneration
		 - The Nomination & Remuneration Committee, whose		 principal members are Outside Independent Directors, shall		 deliberate on individual remuneration in accordance with the		 policies described in (1) through (4) above.
		 - The President and Representative Director, who is in a		 position to oversee and control the overall performance of		 the Company, shall decide specific details of individual
		 remuneration based on discretionary assignment from the		 Board of Directors and the deliberations by the		 Nomination & Remuneration Committee.

Environment

Remuneration for Audit & Supervisory Board Members isdetermined through consultation between such members.

Officer type

Total
remuneration(Millions of yen)

Total remuneration by type(Millions of yen)

Numberof eligible
officers
Performance- Retirement (Persons)Fixedlinkedbenefitremuneration

Directors (Excluding
Outside Directors)

150

140

10

—

6

Audit & Supervisory
Board Members(Excluding Outside
Members)

16

16

—

—

2

Outside Directors

28

28

—

—

3

Outside Audit &Supervisory Board
Members

16

16

—

—

2

Total

212

202

10

—

13

Notes:
1. The Company resolved to abolish its retirement allowance system for
Directors and Audit & Supervisory Board Members at the conclusion of the140th Annual Shareholders’ Meeting held on June 28, 2007.
2. The above figure for total fixed remuneration does not include payments(totaling ¥39 million) by four subsidiaries of the Company to four Directors
concurrently serving as Directors or Audit & Supervisory Board Members of
those subsidiaries. It also does not include payments (totaling ¥21 million) by
six subsidiaries of the Company to two Audit & Supervisory Board Members
concurrently serving as Directors or Audit & Supervisory Board Members of
those subsidiaries.

Skills Required of Board of Directors
The following seven skills have been selected as those that theBoard of Directors should possess in order to realize the Company’s Management Philosophy and management strategies andplans.
(1) Corporate management, (2) Business strategy and marketing,(3) Technology development and IT, (4) Finance and accounting,(5) Legal affairs and risk management, (6) Personnel and humanresource development, and (7) International perspective
We have selected “(2) Business strategy and marketing” as a skill
item because marketing, which forms the core of our management, goes beyond sales and marketing and goes hand in handwith business strategy. In the Machinery business, we selected“(7) International perspective” to reflect the Company’s commitment to strengthen and rebuild its overseas marketing capabilities
and enhance its product, sales, and service technology capabilities overseas. We believe that the other items—(1) Corporate
management, (3) Technology development and IT, (4) Financeand accounting, (5) Legal affairs and risk management, and (6)Personnel and human resource development—are skills that board
members of a manufacturing company should possess as a matterof course.

S o c ie t yGovernance

The Company’s policy is to strike a balance between the expertise and experience of directors with respect to these skills, as well
as diversity in terms of gender, work experience, and age, within
the limits of the number of Directors stipulated in the Articles ofIncorporation.

Election/Dismissal and Nomination Policies andProcedures
Candidates for Directors and Audit & Supervisory Board Members
shall have the character, insight, and ethics appropriate for the
position and be capable of fulfilling the duties and responsibilitiesof the position. In addition, candidates for full-time Directors shallhave sufficient experience and knowledge of the Company’s
operations and excellent management judgment, and candidates
for Audit & Supervisory Board Members must understand theimportance of auditing in corporate management, possess therequired knowledge, and have a high level of normative awareness.
Nominations of candidates for directors are deliberated by
the Nomination & Remuneration Committee and decided by
the Board of Directors. Nominations of candidates for Audit &Supervisory Board Members are deliberated by the Nomination &Remuneration Committee and decided by the Board of Directors
with the consent of the Audit & Supervisory Board. The Board of
Directors appoints senior management team members who are
qualified from the perspective of realizing the Company’s Management Philosophy, management strategy, and so forth. The
Nomination & Remuneration Committee deliberates on whether
or not to reappoint such members based on a review of theirachievement status against management plans and performanceindicators, including by division, and on whether to dismiss them
if they engage in fraudulent activities and the like.

Strategic Shareholdings
The Company owns strategic shareholdings for the purposeof improving corporate value over the medium and long terms
by maintaining and strengthening relationships with importantbusiness partners. Each year, the Board of Directors examines
each stock of the Company’s strategic shareholdings and verifies
the purpose for which the stock is held and whether the benefits
and risks associated with holding the stock are commensuratewith the cost of capital. The Board of Directors also examines
the appropriateness of continual ownership after comprehensive
consideration of both qualitative and quantitative factors. We
will endeavor to reduce the number of stocks that are no longer
necessary to hold by selling them as appropriate. In exercising
voting rights for the Group’s strategic shareholdings, we do notmake uniform decisions on whether to approve or disapprovebased on routine or short-term criteria. Rather, we exercise suchrights after making appropriate judgments from a comprehensive perspective that fully respects the management policies andstrategies of the issuing company. We also consider whether theshares will enhance the issuing company’s value and shareholder
returns over the medium and long terms, and whether they will
not undermine the significance of the Group’s shareholdings.
* For more information, please refer to our “Corporate Governance Report.”

Annual Report 202225

Directors(As of June 29, 2022)

Naohisa Miyakawa

Minoru Nakatogawa

Chairman and Representative Director
April 1975: Joined the Company
June 2007: Executive Officer, General Manager,
Human Resources & General Affairs
Department, and General Manager,
Secretary Department
June 2009: Executive Officer of the Company,
President & Representative Director of
Furukawa Denshi Co., Ltd.
June 2011: Director and Senior Executive Officer of theCompany, President & Representative Directorof Furukawa Denshi Co., Ltd.
June 2013: President & Representative Director
June 2021: Chairman and Representative Director (current
position)
Holdings in the Company: 43,288 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

President and Representative Director
April 1983: Joined the Company
June 2017: Executive Officer of the Company, Executive
Vice President & Director of Furukawa UNIC
Corporation (In charge of Promotion of Midterm Business Plan)
June 2018: Executive Officer of the Company, President& Representative Director of Furukawa UNIC
Corporation
June 2019: Director and Senior Executive Officer of theCompany, President & Representative Director of Furukawa UNIC Corporation
June 2020: Director and Managing Executive Officer of
the Company, President & Representative
Director of Furukawa UNIC Corporation
June 2021: President and Representative Director(current position)
Holdings in the Company: 11,636 shares
Attendance at Board of Directors‘ meetings: 16/16 times

Reason for Appointment
Naohisa Miyakawa served as President and Representative Director of the Company for eight

years from June 2013. During that time, he demonstrated strong leadership, including by formulating
FURUKAWA Power & Passion 150 (Vision for 2025) and promoting management reforms. Even
after assuming the position of Chairman and Representative Director, he has continued utilizing
his abundant experience and insight to manage the Company. We have elected him to continue
as a Director, judging that it is necessary to utilize his abundant experience and insight to improve
corporate value and achieve sustainable growth.

Reason for Appointment
Minoru Nakatogawa has held important positions in the Company and Group companies after serving
in the Legal Department and the Public Relations/IR Department for many years. After serving as
President and Representative Director of Furukawa UNIC Corporation, he was appointed President andRepresentative Director of the Company in June 2021. He has since demonstrated strong leadership inmanaging a Group company and driving the Group’s management. We have elected him to continue
as a Director, judging that it is necessary to utilize his abundant experience and leadership in the
Company’s management in order to achieve FURUKAWA Power & Passion 150 (Vision for 2025).

Masahiro Ogino

Kiyohito Mitsumura

Managing Director
Assistant to the President; in charge of Industrial
Machinery Segment, UNIC Machinery Segment, Metals Segment, Environmental & Safety Management
Department, and Purchasing Department
April 1980: Joined the Company
June 2012: Executive Officer and General Manager,
Corporate Planning Department
Sep. 2013: Executive Officer, General Manager,
Corporate Planning Department, and General
Manager, CSR Promotion Department
April 2014: Executive Officer and General Manager,
Corporate Planning Department
June 2014: Senior Executive Officer of the Company,
President & Representative Director of Furukawa
Rock Drill Co., Ltd.
June 2015: Director and Senior Executive Officer of theCompany President & Representative Directorof Furukawa Rock Drill Co., Ltd.
June 2018: Managing Director (current position) andManaging Executive Officer of the Company
President & Representative Director of Furukawa Rock Drill Co., Ltd.
Holdings in the Company: 16,633 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Senior Managing Director and Senior Managing
Executive Officer
Assistant to the President; in charge of Rock Drills
Segment
April 1982: Joined the Company
June 2015: Executive Officer of the Company, President& Representative Director of Furukawa
Metals & Resources Co., Ltd.
June 2017: Director, Senior Executive Officer, andGeneral Manager, Corporate Planning
Department
June 2019: Director, Managing Executive Officer, andGeneral Manager, Corporate Planning
Department
June 2021: Senior Managing Director and Senior
Managing Executive Officer of the Company(current position), President & Representative
Director of Furukawa Rock Drill Co., Ltd.
(current position)
Holdings in the Company: 11,650 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Reason for Appointment

Reason for Appointment

Masahiro Ogino has extensive experience and a proven track record in the Materials business.
As General Manager of the Corporate Planning Department, he has also been involved in formulating
management strategies for the entire Group and helped reinforce its management structure.
Since June 2021, he has led the Group’s Rock Drill segment, demonstrating leadership as President& Representative Director of Furukawa Rock Drill Co., Ltd. We have elected him to continue as a
Director, judging that it is necessary to utilize his abundant experience and execution capability in the
Company’s management in order to improve corporate value and achieve sustainable growth.

Kiyohito Mitsumura has extensive experience and knowledge of the Company’s administrative divisions
and overseas business. He has also contributed to the enhancement of corporate value for many years
as Director in charge of the Machinery business, which the Company positions as its core business.
We have elected him to continue as a Director, judging that it is necessary to utilize his abundant
experience and execution capability in the Company’s management in order to improve corporate
value and achieve sustainable growth.

Tatsuki Nazuka

Hiroyuki Sakai

Director and Managing Executive Officer
In charge of Electronics Segment, Chemicals
Segment, and Technology Division
April 1981: Joined the Company
June 2015: Executive Officer and Deputy General Manager,
Development Division
June 2017: Executive Officer and General Manager,
Development Division
Oct. 2017: Executive Officer and General Manager,
Technology Division
June 2019: Director & Senior Executive Officer and General
Manager, Technology Division
June 2022: Director and Managing Executive Officer of theCompany (current position) and General
Manager, Technology Division (current position)
Holdings in the Company: 9,438 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Managing Director
In charge of Real Estate Business and Corporate
Department *1
April 1982: Joined the Company
June 2017: Executive Officer and General Manager,
Business Process Re-engineering Department
June 2019: Director & Senior Executive Officer andGeneral Manager, Business Process Reengineering Department
June 2021: Director & Senior Executive Officer and General
Manager, Corporate Planning Department
June 2022: Managing Director (current position)
Holdings in the Company: 9,630 shares
Attendance at Board of Directors‘ meetings: 16 /16 times*1 Corporate Planning Department, Sustainability Promotion Department,
Accounting Department, Financial Department, Human Resources &General Affairs Department, Legal Department, Information System
Department, and Internal Audit Department

Reason for Appointment

Reason for Appointment

Hiroyuki Sakai has a wide range of experience and knowledge in accounting, finance, andadministration, having held key positions in the Company and other Group companies. As the person
in charge of the Business Process Re-engineering Department, he has promoted standardization,
streamlining, and productivity improvements in the Group’s operations and helped re-engineer its
business processes. He has also spearheaded the Company’s real estate business and addressed a wide
range of management issues. We have elected him to continue as a Director, judging that it is necessary
to utilize his wide-ranging knowledge and experience in the Company’s management in order toimprove corporate value and achieve sustainable growth.

Tatsuki Nazuka has been working in the Technology Division for many years and has professional
knowledge and experience in technological and product development. As General Manager of thatdivision, he promoted the Group’s technology strategy and technology development. At the sametime, he has contributed to the enhancement of corporate value as Director in charge of the Materials
business. We have elected him to continue as a Director, judging that it is necessary to utilize his
specialized knowledge and experience in the Company’s management in order to improve corporate
value and achieve sustainable growth.

26 FURUKAWA CO., LTD.

Tatsuya Tejima

Yoichi Mukae

Outside Independent Director
April 1969: Joined Toho Zinc Co., Ltd.
June 2003: Representative Director and Managing
Director, and Managing Executive Officer of
Toho Zinc Co., Ltd.
June 2005: Representative Director and Senior Managing
Director, and Senior Managing Executive
Officer of Toho Zinc Co., Ltd.
June 2006: Representative Director and COO of Toho
Zinc Co., Ltd.
June 2008: Representative Director and President of
Toho Zinc Co., Ltd.
June 2017: Advisor of Toho Zinc Co., Ltd. (current
position), Director of the Company (current
position)
June 2018: Outside Director, HANWA Co., Ltd.
(current position)
Holdings in the Company: 3,120 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Outside Independent Director
April 1975: Joined Ministry of International Trade andIndustry
June 2004: Director-General for Commerce andDistribution Policy, Minister’s Secretariat of
Ministry of Economy, Trade and Industry
August 2006: Managing Director of The Shoko Chukin
Bank, Ltd.
August 2008: Advisor of The Kansai Electric Power Company,
Incorporated
June 2009: Managing Director of The Kansai ElectricPower Company, Incorporated
June 2013: Director, Managing Executive Officer of The
Kansai Electric Power Company, Incorporated
June 2015: President & Representative Director of
The Kanden L&A Company, Limited, andPresident & Representative Director of
KANDEN EL AUTO SYSTEM Co., Ltd.
June 2019: Director of the Company(current position)
June 2020: Advisor of The Kanden L&A Company,
Limited, Representative Director of ResearchInstitute of Economy, Trade and Industry(current position), and President of GS1
Japan (current position)
Holdings in the Company: 7,667 shares
Attendance at Board of Directors‘ meetings: 16 /16 times

Reason for Appointment

Tatsuya Tejima has been involved in corporate management for many years and has overseas businessexperience. He also has a proven track record and broad knowledge as a manager. Based on these, he
has provided advice on the Company’s management and appropriately supervised business execution
from an objective perspective independent of management. We have elected him to continue as an
Outside Director, confident that he can continue providing useful advice and appropriate supervisionof the Company’s management.

Reason for Appointment

Kazumi Nishino

Outside Independent Director
April 1992: Joined Fuji Photo Film Co., Ltd. (retired in
March 1996)
April 2006: Associate Professor, Department ofManagement of Science & Technology,
Graduate School of Management of Science& Technology, Tokyo University of Science
Graduate School
April 2017: Associate Professor, Graduate School ofCommerce and Management of Hitotsubashi
University
June 2019: Associate Professor, Graduate School ofBusiness Administration, Hitotsubashi
University, Outside Director, Orient Corporation (current position), and Director of theCompany (current position)
December 2019: Outside Director, MiRTeL Co., Ltd.
April 2022: Professor, Graduate School of Business
Administration, Hitotsubashi University(current position)
June 2022: Outside Director, Makino Milling MachineCo., Ltd. (current position)
Holdings in the Company: 5,079 shares
Attendance at Board of Directors‘ meetings: 16/16 times

Yoichi Mukae has a wide range of experience and knowledge, having held important positions
at the Ministry of Economy, Trade and Industry for many years and engaged in the managementof private companies after retiring from the Ministry. In addition, he has high levels of characterand insight and has provided advice on the Company’s management and appropriately supervised
business execution from an objective perspective that is independent of the management team.
We have elected him to continue as an Outside Director, confident that he can continue providing
useful advice and appropriate supervision of the Company’s management.

Reason for Appointment

Kazumi Nishino specializes in business strategy theory as a Professor at Hitotsubashi University Graduate
School of Business Administration and has specialized knowledge and a practical research track recordon business model analysis, logic of new business creation, and product development management.
Based on these, she has provided advice on the Company’s management and appropriately supervised
business execution from an objective, professional, and diverse perspective that is independent of the
management team. We have elected her to continue as an Outside Director, confident that she cancontinue providing useful advice and appropriate supervision of the Company’s management.

Directors’ Expertise and Experience (Skills Matrix)
Name

Independent

Corporate Business Strategy/ Technology
Management
Marketing
Development/IT

Naohisa Miyakawa○○

Minoru Nakatogawa○○

Finance/
Accounting○

Masahiro Ogino○○

Kiyohito Mitsumura○○

Hiroyuki Sakai○

Tatsuki Nazuka○

Tatsuya Tejima★

○

Yoichi Mukae★

○

Kazumi Nishino

★

Legal
Affairs/Risk
Management

Personnel/HR
Development

International
Perspective

○

○

○
○

○
○
○

○

○
Annual Report 2022

27

Audit & Supervisory Board Members(As of June 29, 2022)

Minoru Iwata

Kazuo Inoue

Audit & Supervisory Board Member (Full-Time)
April 1979: Joined the Company
June 2011: Executive Officer and General Manager,
Accounting Department
June 2013: Director, Senior Executive Officer, andGeneral Manager, Accounting Department
June 2015: Director
June 2016: Managing Director
June 2019: Audit & Supervisory Board Member(Full-time) (current position)
Holdings in the Company: 9,700 shares
Attendance at Board of Directors‘ meetings: 7/7 times

Audit & Supervisory Board Member (Full-Time)
April 1980: Joined the Company
June 2011: General Manager, Real Estate Division
June 2014: Executive Officer, General Manager,
Corporate Planning Department
June 2016: Senior Executive Officer and General
Manager, Corporate Planning
Department
June 2017: Audit & Supervisory Board Member(Full-time) (current position)
Holdings in the Company: 5,100 shares
Attendance at Board of Directors‘ meetings: 7/7 times
Reason for Appointment

Reason for Appointment

Minoru Iwata has considerable knowledge of finance and accounting and a wealth of experience in overallmanagement, having been involved in the Accounting Department for many years since joining the Company
and in the management of the Company as a Director since 2013. We have elected him as an Audit &Supervisory Board Member, judging that he is capable of conducting objective and appropriate audits.

Kazuo Inoue has been working in the Accounting Department for many years, and has also served as
Director of a Group company and Executive Officer of the Company. Accordingly, he has considerable
knowledge of finance and accounting and a wealth of experience in overall management. We haveelected him as an Audit & Supervisory Board Member, judging that he is capable of conducting objective
and appropriate audits.

Tetsuro Ueno

Masayuki Yamashita

Outside Audit & Supervisory Board Member
April 1976: Joined The Dai-Ichi Kangyo Bank, Ltd.
April 2009: Deputy President (Representative Director)
and Deputy President & Executive Officer ofMizuho Bank, Ltd.
April 2011: Advisor of Mizuho Bank, Ltd.
June 2011: Deputy Chairperson and Executive Officer of
Chuo-fudosan Co., Ltd.
June 2012: Representative Director and President of
Seiwa Sogo Tatemono Co., Ltd.
June 2013: Audit & Supervisory Board Member of
Chuo-fudosan Co., Ltd.
June 2015: Audit & Supervisory Board Member of theCompany (current position)
June 2018: Special Advisor of Seiwa Sogo Tatemono
Co., Ltd.
June 2021: Advisor of Seiwa Sogo Tatemono Co., Ltd.
(current position)
Holdings in the Company: 1,500 shares
Attendance at Board of Directors‘ meetings: 7/7 times
Reason for Appointment

Tetsuro Ueno has been engaged in corporate management for many years, and has extensive experienceand a wide range of knowledge as a manager. Based on these, he has conducted effective audits from astandpoint that is independent of the Company's management. We have elected him as an Outside Audit& Supervisory Board Member, judging that he is capable of conducting objective and appropriate audits.

Outside Audit & Supervisory Board Member
April 1980: Joined Asahi Mutual Life Insurance Company
April 2016: Representative Director and Senior Executive
Officer, Asahi Mutual Life Insurance Company, Outside Director of Rasa Industries, Ltd.
(June 2014)
June 2016: Audit & Supervisory Board Member of
the Company (current position)
April 2018: Director, Asahi Mutual Life Insurance
Company
June 2018: President & Representative Director, Info
Techno Asahi Co., Ltd.
June 2019: Outside Director, Rasa Industries, Ltd. (Audit &Supervisory Committee)
Holdings in the Company: 0 shares
Attendance at Board of Directors‘ meetings: 7/7 times

Reason for Appointment

Masayuki Yamashita has a wealth of experience at financial institutions and a proven track record
as an Outside Audit & Supervisory Board Member at other companies. We have elected him as an
Outside Audit & Supervisory Board Member, confident that he can utilize his experience to enhance
the Company’s auditing system.

Executive Officers(As of June 29, 2022)
Senior Managing
Executive Officer

Masahiro Ogino

President & Representative Director,
Furukawa Rock Drill Co., Ltd.

Executive Officer

Kazuyoshi Iwama

President & Representative
Director, Furukawa Industrial
Machinery Systems Co., Ltd.

Managing Executive
Officer

Tatsuki Nazuka

General Manager, Technology
Division

Executive Officer

Kenji Yamakawa

President & Representative Director,
Furukawa UNIC Corporation

Managing Executive
Officer

Katsuhira Kawashita Director, Furukawa Industrial

Executive Officer

Tatsuyuki Muramatsu

Vice President & Representative
Director, Furukawa UNIC Corporation

Senior Executive
Officer

Osamu Miyazaki

General Manager, Corporate
Strategy, Corporate Planning
Department

Executive Officer

Masanori Saito

President & Representative Director,
Furukawa Metals & Resources Co.,Ltd.

Senior Executive
OfficerAtsushi Takano

General Manager, Human
Resources & General Affairs
Department

Executive Officer

Kenichi Kurita

President & Representative
Director, Oita Mining Co., Ltd.

Senior Executive
OfficerTakeshi Miyajima

General Manager, Legal
Department

Executive Officer

Hitoshi Iida

President & Representative
Director, Furukawa Denshi
Co., Ltd.

Executive Officer

Masayuki Kunou

General Manager, Environmental & Safety Management
Department

Chairman & Representative

Machinery Systems Co., Ltd.

28 FURUKAWA CO., LTD.

Message from an Outside Independent Director

Outside Independent Director

Yoichi Mukae
I have been involved in the management of Furukawa Company
as an Outside Independent Director for more than three years,
focusing on corporate governance and compliance. My impressionof the Company is that it is a very solid and stable, albeit
unspectacular, organization. Recently, there’s a lot of talk about
corporate scandals, but from my experience in the management ofvarious companies, I believe there is little reason to be concernedor worried about with respect to governance and compliance at
the Company.

Role as Outside Independent Director
I believe that Outside Directors have three main roles: monitor
and supervise management, provide advice and approval on
business strategies and other matters, and reflect the opinions ofshareholders and other stakeholders. The most important of theseis the monitoring and supervision of management. When making
high-level management decisions, monitoring and supervisionby outsiders are essential to verify whether governance andcompliance are sufficiently ensured. My major role as an Outside
Director is to monitor and supervise the Company’s managementfrom an external perspective. In terms of advice and approvalof business strategies, I leave short-term business planning andexecution to internal directors and executive officers, given that wehave adopted an Executive Officer system. However, I am prepared
to provide opinions and advice on approach and direction in theformulation of medium- to long-term management strategies
and other matters. As for reflecting the opinions of shareholders
and other stakeholders, it is often said that “what appears to becommon sense to a company is often irrational to the outside
public.” Since this can happen at any company, I always try to
speak from the perspective of “outside common sense,” so we
do not descend into such a situation. Shareholders expect us to
improve our business performance and increase our corporate
value. In terms of responsibility to shareholders, I will fulfill myrole as an Outside Director to ensure the Company’s sustainablegrowth and performance, as well as commensurate shareholder
returns.

My Skills
This year, we began disclosing a skills matrix for directors. In mycase, my key skills are “Corporate management” and “Legalaffairs and risk management.” For corporate management,
I try to verify measures and initiatives based on my experienceand knowledge of corporate management in various companies
in the past. For legal affairs and risk management, I draw on myexperience in conducting legal checks over many years. Looking at
the operation and proceedings of the Board of Directors’ meetings,
I rate the Company as being very attentive and well-run. I believethat the steadfastness that has been handed down over our nearly
150-year history is firmly entrenched in the Company.

Sustainability Initiatives
I recognize that the public’s interest in sustainability is growing
daily. The Company had a very difficult experience in thepast with environmental problems at the Ashio Copper Mine.
Upon reflection, I believe it has taken a positive approach toenvironmental considerations and countermeasures. We should
also adapt our CO2 emission reduction and carbon neutrality
measures to the demands of the times. It is important toimplement these measures in a steady and methodical mannerfrom a long-term perspective.

Relationships with Internal Directors
I believe that maintaining an appropriate level of tension andfostering a sense of trust between inside and outside directors
is necessary for the Company’s governance to be sound. Apartfrom meetings of the Board of Directors, meetings between
Representative Directors and Outside Directors are held several
times a year. At those meetings, I try to give frank opinions andsuggestions while maintaining a good sense of urgency.
At the same time, I communicate with internal directors throughsite visits and discussions at meetings to foster a sense of trust.
If, as an Outside Director, I can verify the Company’s general
direction and strategy, I leave business execution to internal
directors and executive officers, without interfering in small
details. In the process, I have confirmed the Company’s corporate
management is sound and smooth.

Management Issues and Future Aspirations
Currently, the Group’s business portfolio consists of six segments
under two business divisions: Machinery and Materials. In thelong run, our challenge is to be selective and focused, so it will
be difficult to achieve significant growth in all six segments.
By concentrating management resources in businesses withsignificant future growth potential, the Group can achieve evengreater growth, I believe. Going forward, our management
challenges will be to identify and cultivate the seeds of growthand formulate a sound growth strategy accordingly.
As I mentioned earlier, my major role as an Outside Director is
to monitor and supervise management. While fulfilling my dutyof care as a director, I intend to demonstrate my sensitivity to
the atmosphere and environment before problems occur, thenact to solve those problems in advance. This presupposes thatthe entire Group is open and transparent, with no congestionof information. I would also like to serve as an intermediary toensure that the intentions of shareholders and other stakeholdersalign with the Group’s direction and timeline as much as possible.
Ultimately, I want to contribute to the growth of the Group in any
way possible and thus help increase its corporate value.
August 2022

Annual Report 2022

29

The Furukawa Company Group’s ESG Activities

Risk Management
The Furukawa Company Group will strengthen and expand the enterprise risk management systems in order to improve themanagement foundation with a view to growth. We will also take steps to improve corporate value by business operation
practices that show consideration for the Group’s CSR and ESG issues. When risks emerge that appear capable of interferingwith the Group’s business activities, the new Risk Management Committee established at Furukawa Co., Ltd., takes measures
to protect the Group’s life and property and to minimize its damage and losses.

Risk Management System

Quality Assurance

The former Risk Management Committee that up to now had dealt
with accidents, natural disasters, epidemics, and other such risks has
been abolished, and a new Risk Management Committee has been
established to manage all the risks surrounding the Group.
The new Risk Management Committee evaluates risks in every
Group company and department and conducts examination andevaluation of measures to address risks. As a result, when a risk isjudged to pose a danger of seriously affecting Group management,
the Committee promotes effective management of that risk byreporting its evaluation results and the pros and cons of response
measures to the Board of Directors.
The Committee also has the Human Rights Risk Sectional Meeting,
Environmental Risk Sectional Meeting, and Group business continuity
plans (BCP) Sectional Meeting under it. These address issues relating to human rights, issues relating to carbon neutrality and othermatters concerning climate change, and issues relating to business
continuity when crises occur, and take measures to resolve them.
Risk Management System

Board of Directors /President & Representative Director
Instruction

Sustainability Promotion Meeting
Comprehensive deliberations onsustainability / CSRInteraction

Sustainability Promotion
Department(Secretariat)

Reporting

Risk Management Committee
Comprehensive deliberations onenterprise risk management

Instruction

Reporting
Human Rights Risk
Sectional Meeting
Environmental Risk
Sectional MeetingGroup BCP
Sectional Meeting

Implementation Bodies (PDCA Cycle)
Furukawa Co., Ltd. Relevant DepartmentsCore Operating
Companies

Furukawa Industrial Machinery
Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Metals & Resources
Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.

Business Continuity Management (BCM) Operation
Going forward, we will concentrate on BCM operation and on
confirming and reviewing Group companies’ BCPs, centering thiswork mainly within the Group BCP Sectional Meeting.

Secretariat of
headquarters for BCP

Headquarters for
BCP

Human Resources Team

3

4

Public Relations Team
Finance Team

Quality Assurance Management System
President & Representative Director

1. Director-generals of headquarters for BCP
2. Vice Director-generals of headquarters for BCP

Sustainability Promotion
Department(Secretariat)
Reporting

Furukawa Co., Ltd.

Headquartersinan emergencyofeach company

Information Analysis Team

30 FURUKAWA CO., LTD.

Quality Assurance Committee
Top managers from the production departments of the core
operating companies comprise the Quality Assurance Committee.
This body has organized the Quality Assurance Expert Committeethat brings together those responsible for quality assurance in thecore operating companies and elsewhere. It also has organizedsectional meetings with the Expert Committee members pursuing
activities separately in the Machinery and Materials segments.
Seeking to achieve solutions to the key issues defined each fiscal
year, we are sharing information on measures to analyze and reducecomplaints at each site and seeking horizontal deployment ofmethods. We are also promoting compliance with laws andregulations relating to manufacturing, quality assurance, and product safety, and promoting the manufacture of products that
customers can use safely and with a sense of security.
Based on the understanding that product safety is included inquality assurance, we are also continuously promoting risk assessment and other such activities to heighten product safety levels.

Guidance / Instruction

General Affairs Team2

Quality Assurance Management System
The organization that engages in comprehensive deliberations onimportant matters relevant to quality assurance in the Group is the
Quality Assurance Committee, which was established at the headquarters of Furukawa Co., Ltd. In addition, the Quality AssuranceManagement Department has been established in the Company’s
Technology Division to manage the Group’s quality assurance systemand promote activities for quality assurance and product safety. Eachorganization takes steps for coordination while engaging the entire
Group in our ongoing effort to provide manufacturing and service
that will satisfy our customers and gain their trust.

Sustainability Promotion MeetingGroup BCP Structure1

Quality Assurance
Quality assurance in the Furukawa Company Group is based on the
Quality Assurance Basic Policy and the Quality Assurance Action
Guidelines. These set our basic policy as gaining the trust of ourcustomers, providing products and services of quality that satisfies
them, and contributing to society.
In addition, the Quality Assurance Committee guarantees thesafety and security of all the products and services produced by theGroup and pursues a variety of initiatives to satisfy our customers.
Our aim is for overseas procurement, production at overseas works,
and also export products, to provide assurance of the same
“Japanese quality” that we take pride in as Japanese manufacturers.

3. Committee members of headquarters for BCP
4. Secretariat of headquarters for BCP

Quality Assurance Committee
Quality Assurance Expert Committee

Quality AssuranceManagement Department(Secretariat)

Core Operating Companies

Machinery Sectional Meeting

Materials Sectional Meeting

Furukawa Industrial
Machinery Systems Co., Ltd.
Furukawa Rock Drill Co., Ltd.
Furukawa UNIC Corporation

Furukawa Metals &Resources Co., Ltd.
Furukawa Denshi Co., Ltd.
Furukawa Chemicals Co., Ltd.
Yamaishi Metal Co., Ltd.

Environment

S o c ie t yGovernanceComplianceIn addition to complying with laws and regulations, the Group believes it has a corporate obligation to take serious andresponsible action in terms of social and ethical aspects. To fulfill this obligation, we established the Furukawa Company
Group’s Charter of Corporate Conduct and the Furukawa Company Group’s Code of Conduct for Officers and Employees,
and are taking steps to foster comprehensive awareness to enable all Group officers and employees to engage in operations in awareness of the importance of compliance.

Compliance System
The Group’s chief executive for compliance is the Company’s
President. Personnel responsible for compliance are also present inevery company department and in the Group companies as well.
There is also a Compliance Committee that promotes Group
compliance activities, deliberating on important matters relating tocompliance, developing the compliance system, and taking steps
to strengthen awareness. Content deliberated in the Committee
is additionally reported to the Sustainability Promotion Meetingas required, and steps are taken to share information related tocompliance with the Group as a whole.

Internal Reporting System
The Group has adopted an internal reporting system to facilitate
early detection and correction of compliance violations. This
has involved developing a framework that enables an extensive
range of reporting and inquiries by establishing points of contact
for reporting and consultation requests inside and outside (lawoffice) the Group. When reports and requests for consultation
are received, the Compliance Committee investigates and takes
measures as necessary. Personal information about whistleblowers
who make reports and information that may lead to identification of whistleblowers who make reports are held under strict
control at the Internal Reporting Desk. In addition, it is forbidden
for Group officers and employees to seek out whistleblowers or,
taking the fact of having made an internal report as the reason,
to treat the whistleblowers in a disadvantageous manner. We also
facilitate awareness of the internal reporting system by postingsuch content to our in-house portal site and distributing brochures
to Group officers and employees.

Compliance Education
We are engaged in fostering a corporate climate that places value
on compliance. This includes publication of the Compliance Newsas provision of information regarding compliance to all Group
officers and employees. On occasion, top management also
explains the importance of compliance and the priority assigned
to it. In light of the impact of COVID-19, trainings on specifictopics were conducted in fiscal 2021 using online systems such as
web conferencing systems and video streaming.

Basic Policy and Guidelines for Preventing Bribery
and Corruption
The Group enacted the Basic Policy for Preventing Bribery andCorruption and the Basic Guidelines for Preventing Bribery andCorruption in January 2021. This explicitly stated externally theGroup’s stance regarding prevention of bribery and corruption. It
also clarified specific procedures for preventing bribery andcorruption in business activities. We are following up withcomprehensive compliance with this policy and guidelines andtaking steps for the prevention of bribery and corruption.

Compliance throughout the Supply Chain
Effectively maintaining compliance in the Group requires
compliance with laws and regulations by all elements of the
supply chain, including business partners. With this in mind, theGroup distributes its “Sustainability Promotion Guidelines” tobusiness partners to ensure thorough compliance with humanrights, labor, laws and regulations, and corporate ethics.

Human rights and labor(1) Respect human rights.
(2) Have no involvement with child labor, forced labor, or		 unlawfully cheap labor, whether directly or indirectly.
(3) Achieve a work environment with no discrimination or		 harassment of any sort committed against employees.
(4) Comply with labor laws and provide positive working conditions.
Legal compliance and corporate ethics(1) Comply with Japanese and overseas laws and social norms.
(2) Do not provide or receive benefits in contravention of laws
		 or commercial practices.
(3) Do not commit acts that hinder fair and free competition.
(4) Do not maintain any relationships with antisocial forces.
(5) Do not infringe on the intellectual property rights of		 third parties.
(6) Establish structures for the prevention, quick discovery, and		 handling of improper conduct.
(7) Do not use minerals unearthed in conflict-affected areas
		 and materials produced in production processes that		 infringe on human rights or damage the environment as raw
		 materials.
The Furukawa Company Group Sustainability Promotion Guidelines (excerpt)

The Furukawa Company Group’s Charterof Corporate Conduct
1. Providing high-quality products and services
The Group shall pursue technology developmentthat helps to realize a sustainable society, and it
shall provide products and services that satisfy
customers.
2. Harmony with the global environment
The Group shall work on reducing environmental
risks and pursue corporate activities that are inharmony with the global environment.
3. Ensuring compliance
The Group shall engage in its corporate activities
in a fair manner based on the ethical values 		
expected of corporations and business persons
as members of society.
4. Highly transparent corporate activities
The Group shall appropriately disclose its corporate
information and engage in constructive dialogue
with a wide range of stakeholders to build trust.
5. Respect for human rights
The Group shall respect the human rights of all
individuals.
6. Enhancement of work environment
The Group shall establish a work environmentthat takes into consideration the health and safety
of individuals and realize workstyles that respect thediverse values of officers and employees.
7. Participation in and contribution to society
The Group shall actively participate in society andcontribute to its development.

Annual Report 2022

31

The Furukawa Company Group’s ESG Activities

Environmental Initiatives
The Furukawa Company Group is seeking to contribute to the realization of a sustainable society by acting inaccordance with the Charter of Corporate Conduct and the Basic Environmental Management Principle to engage inbusiness activities that are considerate of decarbonization and other environmental concerns. We will tie this initiativein with new business opportunities. Regarding measures to counter global warming, we will promote activities in linewith our Fourth Medium-Term Reduction Targets, which are based on the Vision for 2025 and cover the 10 years fromfiscal 2020. We have also begun initiatives toward realization of carbon neutrality. In implementing environmental
conservation activities, we take preventive measures, take steps to increase our resilience against natural disasters, andengage in other such actions to improve and reinforce our capabilities for dealing with risk. In addition to promoting
initiatives to reduce the negative impact that our business activities have on the ecosystem, we are also engaging incontinuous greening activities, sound development of mountains and forests, and so on. We are committed to pursuing
the systematic promotion of activities to protect and restore the natural environment and ecosystems.

Environmental & Safety Management Committee

Awareness of Climate Changes

The key matters relating to the Group’s protection of the environment and management of occupational safety and health isdrafted and deliberated in the Environmental & Safety Management Committee, whose members include top managementfrom each of our production centers. The Committee session heldin April 2022 was convened on the web, following the practiceof the previous fiscal year, as a measure against the spread of
COVID-19. At the opening of the session, the president spoke
about promoting business activities that are considerate of theenvironment and pursuing active initiatives for realizing carbon
neutrality. He also observed that the number of accidents anddisasters in fiscal 2022 had increased over the previous fiscal
year. In this light, he gave instructions to promote initiatives toeradicate accidents and disasters. There was then a report on
key environmental and safety activities in fiscal 2022, followedby discussion of the status of progress toward the Fourth Medium-Term Reduction Targets, future trends, the circumstances ofaccident and disaster occurrence, and prevention of recurrence.
In order to reduce accidents and disasters in fiscal 2023, it was
decided to concentrate measures on the three points of training
to improve hazards sensitivity, making use of near-miss reports,and strengthening inspection rounds (workplace patrols). There
was also a briefing by the Environmental & Safety Management
Department about the initiation of specific measures towardrealizing carbon neutrality, with the Sustainability Promotion
Department as the department in charge and the Environmental &Safety Management Department as the implementing force.

Due to factors including the consumption of energy by humanbeings since the Industrial Revolution, the concentration ofgreenhouse gases in the atmosphere has risen and global warming is progressing rapidly. The Group recognizes the risks andopportunities due to climate change as an important management issue, and we have been taking measures to reduce emissions of CO2 and other greenhouse gases. In addition, we arepresently going forward with preparations to disclose information basedon recommendations of the TCFD or an equivalent framework.
The physical risks accompanying climate change are predicted
to grow greater. In light of the government targets for a “46%reduction in CO2 emissions by 2030 relative to the 2013 level”
and “achievement of carbon neutrality by 2050,” it appears thatthe risks and opportunities involved in the coming transition toa low-carbon economy will grow even greater. In order for theGroup to realize sustainable growth even amid changes like these,
we consider it necessary to grasp the risks and opportunities andgo on strengthening our initiatives addressing climate change.
To that end, we are scheduled to create a roadmap of how theGroup will proceed toward carbon neutrality until 2025.
As we proceed toward realization of a carbon-free society,we consider it the social mission of the Group to make every
effort to provide products, technology, and services that are highly effective in reducing emissions of greenhouse gases, and to
reduce the emissions of greenhouse gases that are associatedwith our business activities.

Environment and Safety Promotion System

Furukawa Company Group’s CO2 Emissions (1,000 tons)

President and Representative Director
Sustainability Promotion Meeting
Guidance / Instruction

27

24

25

26

26

22

21

22

'15

'16

'17

'18

'19

'20

'21

'22 （FY）

28
26

Reporting

24

Environmental & Safety
Management Committee
Furukawa Co., Ltd.
Environment / Safety
Promotion Meetings(Environment Meetings, Safety Meetings)

Environmental & Safety
Management
Department(Secretariat)

22
20

Initiative to Realize Carbon Neutrality

Core Operating
Companies

Furukawa Industrial
Furukawa Metals &Machinery Systems Co., Ltd. Resources Co., Ltd.
Furukawa Rock Drill Co., Ltd. Furukawa Denshi Co., Ltd.
Furukawa UNIC Corporation Furukawa Chemicals Co., Ltd.

32 FURUKAWA CO., LTD.

The Group has been taking steps toward the achievement ofcarbon neutrality since fiscal 2022.
Specifically, the plan for Group production centers to follow inmoving toward achievement of the abovementioned government
targets call for us to introduce equipment and devices for the
purpose of decarbonization, propose optimal production processes, study the future schedule for moving toward decarbonization,and implement practical CO2 reduction measures.

Environment

Continuous Mountain and Forest Management(Regarding Company-Owned Mountain Forestland)
Mountain forestland owned by the Company, totaling approximately 2,200 hectares nationwide, contributes to CO2 absorption,
protection of biodiversity, securing water resources, and so on.
We carry out mountain and forest management in collaboration
with local forestry cooperatives, systematically thinning, clearing undergrowth, trimming branches, and so on, for the sounddevelopment of the mountain forestland. At the Kune Forest in
Tenryu Ward, Hamamatsu City, Shizuoka Prefecture, the FSC*1 hasawarded us Forest Management (FM) certification*2.
We have also collaborated with the local forestry cooperativeon the Onuma Mountain Forest in Toyone-mura, Kitashitara-gun,
Aichi Prefecture. Based on site surveys conducted over three years,
we reorganized the forestry sections within this forestland. New
management plans were formulated that have scheduled thethinning and other activities in the
Onuma Mountain Forest for the
55-year period from fiscal 2022
to fiscal 2076, during which wewill continue to implement soundmountain and forest development.
Onuma Forest (Aichi Prefecture)*1 FSC: The Forest Stewardship Council (FSC) operates an international
system for certifying appropriate forestry management.
*2 Forest Management (FM) certification is one of the FSC certifications.

Approach and Initiatives for Management ofChemical Substances
The Environmental and Safety Activity Targets created annually by
the Group includes targets for reduction in the amount of harmful
chemical substances handled. The aim for fiscal 2022 was a 1%
reduction year on year, but with production increases the result
was a 6.5% increase. In fiscal 2023, we are aiming to achieve
reductions by improving coating efficiency and promoting the useof alternative substances that are not covered by the PRTR*3.
Group companies Furukawa Denshi Co., Ltd., and Furukawa
Chemicals Co., Ltd., use large amounts of poisonous materials as
raw material for products. According to chemical substancecontrol regulations, appropriate protective equipment is to beworn when handling these materials, they are to be stored underlock and key, transfers in and out are to be logged, and so on.
We are making every effort to give employees comprehensive
training in these matters so that we prevent accidents involving
chemical substances and operate in safety.
*3 PRTR: Pollutant Release and Transfer Register

Consideration in the Procurement of Copper Ore
As raw material for the copper ingots that are the main productof Furukawa Metals & Resources Co., Ltd., as well as for the goldand silver bullion that are its by-products, that company procurescopper concentrate from mines in Chile, Peru, Canada, the UnitedStates, Australia, Indonesia, Papua New Guinea, and other places.
The company ascertains the actual circumstances at these
supplier mines with regard to environmental protection, humanrights, employment and labor problems, and so on, and notes
if sustainable development and appropriate mine operation arebeing carried out, thereby contributing to mitigation of environmental impact on a global scale.
Regarding conflict minerals, the company also has the policyof not procuring minerals produced in areas where procurement
would risk furthering conflict by serving as a source of funds forarmed groups and human rights violations.

The Fourth Medium-Term Reduction Targets andResults of the Third Year
The Fourth Medium-Term Reduction Targets, which cover fiscal
2020 to fiscal 2029, deal with the predicted upcoming increases

S o c ie t yGovernancein environmental performance figures (CO2 emissions, volume ofwater resources used, and total emissions volume, including waste
and so on) due to the production plan based on the Vision for2025. Following discussions with each core operating company,
targets were set that reduce environmental performance in CO2emissions by 2%, in water resources used by 2%, and in total
emissions volume, including waste and so on, by 3%, respectively,
relative to fiscal 2029.
The third-year results with respect to the Fourth Medium-Term
Reduction Targets showed that reduction targets were achievedfor CO2 emissions volume and total emissions volume, including
waste and so on. However, some sites did not achieve the initial
target values for water resources used, and as a result we also fell
short on the overall target.
As fiscal 2023 brings the fourth year of the Fourth Medium-Term
Reduction Targets, we will work to gain a precise grasp of the statusof progress at each site and carry on with measures to achieve our
reduction targets.

Approach to Biodiversity
Based on the Biodiversity Action Guidelines created in 2012, theGroup has been promoting activities for the preservation andrestoration of biodiversity. These include continuous greening
activities and sound development of mountains and forests.
Rather than using introduced species, we select native speciesof local origin for our greening activities. In the Matsuki Valley(Ashio-machi, Nikko City, Tochigi Prefecture), the formerly abundant nature is coming back. The ecological pyramid with birds ofprey at the top, is being reshaped. The Ashio area, which includes
the Matsuki Valley, is inhabited by large wild animals, such as
Asian black bears, and species designated as special naturalmonuments, including the serow, sika deer, Japanese macaque,foxes, and others.
Going forward, we will carry on with greening efforts not onlyin the Ashio area but at Company-owned properties throughout
Japan, furthering activities for the restoration and recovery ofabundant ecosystems.
C

O

L

U

M

N

Firefly Rehabilitation Project at the Sites of
the Former Kune Mine and Ashio Copper Mine
Fireflies are organisms that reflect that state of the environment,with their presence considered a sign of a healthy water environment. Out of a desire to restore an environment that provides
those fireflies with a sustainable habitat that can be passed on to
the next generation, our Environmental & Safety Management
Department has engaged in a continuing rehabilitation project for
the genji-botaru firefly (Luciola cruciata) at the site of the former
Kune Mine (in Tenryu Ward, Hamamatsu City, Shizuoka Prefecture),
where these fireflies are said to have swarmed. As a result, it has
become possible to view the fireflies in flight every year from lateJune to early July.
In fiscal 2022, a firefly rehabilitation project was started on Company-owned property at the site of the former Ashio Copper Mine(in Ashio-machi, Nikko City, Tochigi Prefecture). Utilizing theconcept of the biotope (a biological habitat), the channel revetments have been protected with gabions and planted withJapanese alder and willow trees that thrive near water, to recreate
an environment favored by fireflies.
In fiscal 2023, a newly created firefly pond was stocked with
Semisulcospira freshwater snails to serve as a food source. Once it
was confirmed that the water snails had established themselves, thepond was stocked with approximately 400 larvae of genji-botaru
firefly (Luciola cruciata) and heike-botaru firefly (Aquatica lateralis).
In late June, fireflies were seen there, and visitors happily watchedthem flying about.
We will continue engaging in
biological and botanical restoration activities in considerationof biodiversity.
Light-trails of fireflies swarming
around the biotope(On Company-owned property,
Ashio-machi, Nikko City)
Annual Report 2022

33

The Furukawa Company Group’s ESG Activities

Social Initiatives
In order to realize its Management Philosophy, which is to remain indispensable to society, the Furukawa Company
Group will fulfill its responsibilities to all stakeholders through ongoing efforts to help create “social value,” specificallyby developing social infrastructure and realizing a safe, environmentally friendly, and prosperous society. We believethat contributing to society is the cornerstone of our social initiatives. With efforts to realize a sustainable society
drawing broad attention, we will look at all points of contact between our corporate activities and society, identify
various social issues ranging from global-scale issues to issues rooted in each region, and engage in activities that help
resolve those issues.

Realizing Rewarding Work Environments
The Group employs talented individuals who will proactively takeon all challenges, while striving to recognize the diverse valuesof individuals, accordingly creating a rewarding corporate culture
wherein human rights violations and discrimination do not occur
and where individuals are evaluated fairly.

Number of female employees(persons)
Female manager ratio(%)

Number of foreign employees(persons)
Foreign employee ratio(%)

283 359 391 415 411 413 437

447 527 585 590 585 567 547

Issues and Considerations for Realizing Rewarding Work Environments
Developing
human
resources
and usingthemproperly

21.7 21.4 21.2
20.6

Developing diverse human resources in response to factors
such as their length of service, position, job description,
and abilities; putting the most capable employees in theright positions regardless of what track they are on;
establishing challenging individual targets; and proper
evaluations

Improving working environments, such as automate andcomputerize operations, shorten meetings, effectively
Workstylereforms to manage meetings; aptly applying various working condiincreasetions (flextime systems, teleworking, adopt discretionary
productivity work systems); and reform of mindsets toward improving
operational efficiency
Reducing annual total working hours, raising the percentEstablishingage of paid annual leave taken, improving the percentage
healthyof scheduled medical examinations received, and actively
workplaces
implementing health promotion activities

Diversity and Inclusion

20.1

19.5

17.7
2.7
2.0
1.5 1.7
1.2

2.1

1.4

'16/3 '17/3 '18/3 '19/3 '20/3 '21/3 '22/3'16/3 '17/3 '18/3 '19/3 '20/3 '21/3 '22/3

Hiring People with Disabilities
The Furukawa Company Group promotes hiring people withdisabilities in various workplaces and for various types of work,
thereby promoting their independence and participation in society.

The Group does not engage in any discrimination regarding
human rights, beliefs, gender, disabilities, and so on in employment, and we endeavor to provide equal opportunities for all.
Because Group businesses extend into a variety of fields, we aretaking measures to stabilize our employment by formulating
staffing and personnel plans with a clear view to businessexpansion and productivity increases, including in Group companies.

Hiring Foreign Nationals
Given its active pursuit of overseas expansion, the Furukawa
Company Group does not base its recruiting decisions on nationality. Moreover, we strive to deepen partnerships that transcend
nationality as we promote a spirit of mutual respect for individual
differences.

Empowering the Female Workforce
The Company is continuing to actively hire and involve women.
We created the Action Plan for Promoting Support for Female
Employees on April 1, 2016, and are gradually upgrading various
systems that are designed to support active participation by
women. We are also upgrading systems for the support of
employees raising children by classifying a portion of childcare
leave as paid leave.

Extending the Mandatory Retirement Age
The mandatory retirement age was raised from 60 years to 65
years on April 1, 2020, in order to stabilize the employment ofelderly people and expand their opportunities for work.
Going forward, we anticipate that these people, by passing on
the technical know-how they have acquired over many years,
will proactively participate in cultivating mid-level and younger
employees as well as in other ways.

Action Plan for Promoting Support for Female Employees(Planned period: April 1, 2021 to March 31, 2026)
Target No. 1

Ensure that women account for at least 20% of all new
graduate recruits

Target No. 2

Appoint at least 10 female managers

Target No. 3

The rate of resignation for personal reasons within five
years of joining the Company among women in planninggroup positions 10% or below

Target No. 4

Encourage employees to take paid annual leave at an
average rate of 12 days per person per year

* This applies to employees of Furukawa Co., Ltd.
Support for Employees Raising Children
As part of measures to support rearing of the next generation, we
have formulated and implemented the General Business Owner
Action Plan. At the same time, we are promoting improvement of
the workplace environment to make it easier for people to takepart in childcare and home care.
34 FURUKAWA CO., LTD.

Respect for Human Rights
Basic Approach
In the Furukawa Company Group’s Charter of Corporate Conduct
and the Furukawa Company Group’s Code of Conduct for Officers
and Employees, the Group states that the human rights of all
people are to be respected, that child labor and forced labor
are forbidden, and that discriminatory treatment, behavior, andspeech are not to be engaged in with regard to nationality, race,
gender, age, faith, religion, social status, disability, and so on.
Training on Human Rights
We have established a code of behavior calling for our officers
and employees to respect basic human rights and refrain fromusing discriminatory language, and accordingly have all of our
new employees take part in human rights training. Additionally,
employees who take part in our employment grade specifictraining undergo in-house training pertaining to workplaceharassment and other efforts to create pleasant work environments and learn from case studies of specific developments thatlead to respect for human rights.

Environment

Basic Approach to Human Resource Management
Premised on its fundamental policy of “what supports limitlessdevelopment of a company is people,” the Furukawa Company
Group employs talented individuals who will actively take on
all challenges, while striving to recognize the diverse values ofindividuals and accordingly creating a rewarding corporate culture absent of human rights violations and discrimination, whereindividuals are evaluated fairly.
Human Resource Development
The Group is aiming to optimize its business framework andheighten its corporate value by developing professional humanresources through human resource cultivation systems of all kinds
and by building a workplace environment where they can exercise
their capabilities to the fullest.
Personnel Evaluation System
Based on the system of assigning grades by function that is usedin the Group, grades are set according to the magnitude of therole the employee is expected to fulfill. By assessing personnel
results and behavioral characteristics in accordance with thepersonnel evaluation system, we are endeavoring to provide
employee guidance and cultivation, develop their capabilities,
and optimize their assignments. At the same time, this serves toprovide fair and equitable treatment in terms of wages, bonuses,
retirement benefits, and so on, and in establishing an environment
wherein motivated employees can participate proactively with asense of security.
Communication to Facilitate Training of Subordinates
Interviews are conducted between immediate supervisors andtheir subordinates on a twice-yearly basis, in addition to the daily
communication that takes place between managers and theiremployees. In the interviews, managers provide feedback to
employees regarding their work, achievements, points for reflection, and findings of performance evaluations, as well as advice
based on their self-reports, and confirm and share the goals they
have set. Meanwhile, supervisors also provide their assessmentswith respect to the self-analysis. The process of undergoingstraightforward performance assessments by their supervisors
enables employees to scrutinize themselves on a regular basis, andthereby helps fuel their motivation for proactive career development.

Supply Chain Management
Basic Approach
The Basic Procurement Policies of the Furukawa Company Group
have the four pillars of the principles of fairness and impartiality,
mutual prosperity, compliance and confidentiality, and promotionof procurement activities that are considerate of CSR. In accordance with these policies, and on the assumption of cooperative
relationships with suppliers, CSR Promotion Guidelines have beenformulated that call for respect for human rights and the environment.
Promoting CSR Activities in the Supply Chain
The Group’s Procurement departments consider it essential tohave cooperative relationships not only within the Group but with
suppliers and others throughout the supply chain. In fiscal 2016,
therefore, we began providing suppliers, including new suppliers,
with an explanation of the purpose of the Group’s CSR procurement and giving them the supplier CSR survey to complete. In
fiscal 2020, we visited three suppliers and exchanged views inorder to promote understanding of our CSR activities.
Considering the points for reflection yielded by the initial survey,
a second round of supplier CSR surveys has been conducted fromfiscal 2022. In order to promote these CSR activities that extend
to the supply chain, and to maintain and improve them, we havebeen moving through the PDCA cycle for the process fromconducting supplier CSR surveys to following up on them. Startingin fiscal 2023, we will be promoting procurement activities withawareness of sustainability in addition to CSR activities.

S o c ie t yGovernance

Strengthening Relations with Major Suppliers: Fostering
Partnerships
The Group considers suppliers to be important partners in aiming
for mutual development.
In fiscal 2022, in order to further strengthen our partnerships
even during the COVID-19 pandemic, we took steps to engage
in communication with suppliers inside and outside the country
using web conferencing. Work on deepening mutual understanding by means of CSR initiatives is continuing in fiscal 2023, andwe hope to foster further relationships of trust.

Work–Life Balance
Creating Comfortable Workplace Environments
We promote activities to help employees maintain their healthand achieve a good work–life balance by reducing overtime andimproving the rate at which they take paid annual leave.
TargetFY2022 Results

Overtime hours(monthly average)

15.5 hours

18.8 hours

Percentage of paid
annual leave taken

60%

66.5%

Total actual working
hours

2,000 or less

1,985.6 hours

100%

100%

Percentage of employees
receiving regular healthchecksFiscal 2022 activities- Set annual leave encouragement days and encouraged
employees with low uptake rates (less than 5 days/year) to taketheir leave- Imposed strict controls on working hours and provided improvement guidance to those who work long hours- Reduced number of face-to-face meetings and encouraged
web conferencing- Promoted the principle of going straight to, and returning
straight home from, outside client meetings and business trips

C

O

L

U

M

N

Selected as a 2022 Health & Productivity
Stock Selection
Furukawa Co., Ltd., has been selected for the 2022 Health &Productivity Stock Selection jointly conducted by the Ministry of
Economy, Trade and Industry (METI) and the Tokyo Stock Exchange(TSE) as a company with particularly outstanding healthy management initiatives that strategically implement employee healthmanagement from a management perspective among companies
listed on the TSE.

Annual Report 202235

Consolidated 11-Year Data
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31

Financial Data
2012/3

2013/3

2014/3

2015/3

2016/3For the year: (Millions of yen)
Net sales¥157,566¥165,539¥163,026¥172,544¥161,799

Cost of sales

138,097

144,224

139,777

146,657

136,447

Gross profit

19,46921,31523,24925,88625,352

Selling, general and administrative (SG&A) expenses

17,314

17,952

16,362

16,961

17,363Operating profit

2,154

3,363

6,886

8,925

7,988

Ordinary profit

1,268

2,763

6,150

6,603

6,227

Profit (loss) before income taxes(2,662)

5,432

7,091

6,160

6,631

Profit (loss) attributable to owners of parent(1,659)

2,976

3,976

9,793

5,056

Cash flows from operating activities

4,978

5,491

1,982

10,241

7,652

Cash flows from investing activities(3,152)(2,252)(3,129)(10,892)(2,855)

Cash flows from financing activities(3,782)

251(4,562)

3,318(8,166)

Capital investment

3,588

2,926

11,430

2,557

2,869

Depreciation
Research and development expenses

3,328
2,621

3,014
2,558

2,828
2,538

3,223
2,227

3,190
2,680

¥193,971¥186,076¥199,408¥207,317¥195,650

Current assets

81,49879,507

76,83980,56476,314Current liabilities

74,80774,43973,97663,87059,749Net assets

47,66851,50756,31370,581

68,262

Interest-bearing debt
Equity85,79546,02280,634
50,11077,21954,69482,05368,78376,241
66,459For the year: (Millions of yen)Segment performance

2012/3

2013/3

2014/3

2015/3

2016/3

Net sales of Machinery¥ 53,198¥ 56,852¥ 71,111¥ 75,990¥ 72,232

Industrial

12,94912,894

18,527

16,712

14,926

Rock Drill

24,14323,305

26,84230,91030,076

UNIC

16,10520,651

25,741

28,36727,22977,91788,026

90,162

93,27085,644

Metals

68,114

77,94478,68481,51374,192

Electronics

4,615

4,987

5,381

5,743

5,477

Chemicals

5,187

5,093

6,096

6,013

5,973

Net sales of Real Estate

1,233

1,058

1,013

2,535

3,045

Operating profit (loss) of Machinery

1,970

2,923

5,333

6,551

5,882

Industrial

708

778

1,851

1,711

1,037

Rock Drill

333

(67)

341

1,225

2,217

UNIC

928

2,212

3,141

3,614

2,627

325

324

1,695

1,770

983

Metals

308

282

1,503

1,449

1,154

Electronics

(234)

(262)

(123)

52

(368)

Chemicals

251

304

315

267

197

356

219

(43)

776

1,276

At year-end: (Millions of yen)
Total assets

Net sales of Materials

Operating profit (loss) of Materials

Operating profit (loss) of Real Estate

36 FURUKAWA CO., LTD.

Financial Data
2017/3

2018/3

2019/32020/32021/32022/3For the year: (Millions of yen)
Net sales¥149,829¥167,695¥174,116¥165,215¥159,702¥199,097

Cost of sales

126,207

142,426

147,674

138,940

137,508

172,995

Gross profit

23,62225,26826,441

26,27522,194

26,101

Selling, general and administrative (SG&A) expenses

17,076

17,447

17,526

17,582

16,601

18,366

Operating profit

6,545

7,820

8,915

8,693

5,592

7,734

Ordinary profit

7,202

8,105

8,235

8,135

6,773

8,996

Profit (loss) before income taxes

6,711

6,594

7,003

7,280

9,907

9,137

Profit (loss) attributable to owners of parent

4,254

4,774

4,654

4,431

7,468

6,477

Cash flows from operating activities

9,818

5,351

11,785

8,400

6,042

8,768

Cash flows from investing activities(3,585)(5,855)(3,386)(5,073)

2,245(5,857)

Cash flows from financing activities(5,030)(2,529)(4,205)(4,843)(3,123)(6,568)

Capital investment

5,424

5,021

5,442

5,938

4,144

4,778

Depreciation
Research and development expenses

3,137
2,464

3,260
2,292

3,473
1,504

3,589
1,177

3,879
1,164

4,003
1,336

¥208,034¥222,211¥215,368¥209,697¥218,275¥229,727

Current assets

79,57887,84587,44185,72588,62596,238Current liabilities

59,79079,32260,37652,55547,83959,859Net assets

79,58487,08680,447

77,966

94,364

100,075

Interest-bearing debt
Equity73,50777,65873,31185,011

72,597
78,21670,41275,543

69,683
91,77065,671
97,253For the year: (Millions of yen)Segment performance

2017/3

2018/3

2019/32020/32021/32022/3

Net sales of Machinery¥ 66,803¥ 73,453¥ 77,580¥ 82,691¥ 68,635¥ 76,938

Industrial

14,041

15,871

17,971

23,237

16,682

17,723

Rock Drill

26,97930,19930,372

27,66324,14930,910UNIC

25,782

27,381

29,23731,79127,80428,30578,96889,98792,722

79,366

88,203

118,163

Metals

67,853

77,33480,067

67,14976,094

102,995

Electronics

5,816

6,307

6,527

5,506

5,741

7,271

Chemicals

5,298

6,344

6,127

6,710

6,367

7,896

Net sales of Real Estate

3,074

3,338

2,999

2,386

2,107

2,115

Operating profit (loss) of Machinery

3,580

5,083

6,567

7,343

3,968

4,679

Industrial

104

1,005

2,088

3,208

2,113

1,396

Rock Drill

897

1,782

1,689

142

(1,324)  1,117

2,578

2,295

2,789

3,992

3,180

2,165

1,870

1,648

1,396

776

1,040

2,349

1,738

867

581

301

499

940

Electronics

17

330

407

(35)

161

666

Chemicals

114

451

406

510

380

743

1,265

1,339

1,163

735

736

743

At year-end: (Millions of yen)
Total assets

Net sales of Materials

UNIC
Operating profit (loss) of Materials
MetalsOperating profit of Real Estate

Annual Report 202237

Consolidated 11-Year Data
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31

Financial Analysis Data
2012/3

2013/3

2014/3

2015/3

2016/3Per share amounts:* (Yen)
Basic earnings¥   (41.07) ¥   73.65 ¥   98.40 ¥  242.34 ¥  125.13

Cash dividends
Net assets

0.00
1,138.75

20.00
1,239.94

30.00
1,353.41

50.00
1,702.21

50.00
1,644.81

Profitability: (%)
Cost of sales margin

87.6

87.1

85.7

85.0

84.3

Gross margin

12.4

12.9

14.3

15.0

15.7

SG&A expense margin

11.0

10.8

10.0

9.8

10.7

Operating margin

1.4

2.0

4.2

5.2

4.9

Ordinary margin
Return on sales

0.8
(1.1)

1.7
1.8

3.8
2.4

3.8
5.7

3.8
3.1

Efficiency and soundness:
Return on equity (ROE) (%) (Note 1)

(3.6)

6.2

7.6

15.9

7.5

Return on assets (ROA) (%) (Note 2)

(0.9)

1.6

2.1

4.8

2.5

Debt-to-equity (D/E) ratio (Times) (Note 3)

1.9

1.6

1.4

1.2

1.1

Equity-to-asset ratio (%) (Note 4)
Total asset turnover (Times) (Note 5)

23.7
0.8

26.9
0.9

27.4
0.8

33.2
0.8

34.0
0.8

Investment indicators:
Dividend payout ratio (%) (Note 6)

—

27.2

30.5

20.6

40.0

Dividends on equity (DOE) ratio (%) (Note 7)

—

1.6

2.2

3.2

2.9

Price book value ratio (PBR) (Times) (Note 8)

0.7

0.9

1.4

1.2

1.0

800
32,356

1,090
44,0851,860
75,2282,120
85,744

1,660
67,139

20
468

24
448

23
429

27
455

24
471

6,395

6,389

7,746

6,266

6,832

Valuables

2,301

2,567

3,003

3,168

3,374

Waste

4,094

3,822

4,743

3,098

3,458

Energy (Thousand GJ)

497

461

454

474

429

Water resources (Thousand m3)

652

641

633

651

666

Number of directors (Persons)

8

8

8

7

8

Number of outside directors (Persons)

1

1

1

1

2
2,521

Stock price at fiscal year-end (Yen)Market capitalization (Millions of yen)
ESG Data
CO2 emissions (Thousand t)
Drain volume (Thousand m3)
Total emissions including waste, etc. (t)Number of employees (Persons)

2,752

2,342

2,413

2,456

Number of female employees (Persons)*

—

—

—

—

283

Total actual working hours (Hours)
Overtime hours (monthly average) (Hours)

2,044
20.75

2,030
19.00

2,075
25.50

2,136
26.27

2,105
23.80

8,485

7,855

7,104

6,554

5,215

Other Data
LME copper price (average; US$/ton)
JPY rate per US$ (average for fiscal year)

79.07

83.10

100.24109.93120.13Copper production volume (Tons)

76,896

90,38787,76790,44786,466

Copper sales volume (Tons)

82,597

96,78994,966

96,67594,327

Notes: 1. Return on equity (ROE) = Profit (loss) attributable to owners of parent /		 Average equity × 100

4.	Equity-to-asset ratio = Equity (fiscal year-end) / Total assets (fiscal year-end) × 100

2. Return on assets (ROA) = Profit (loss) attributable to owners of parent /		 Average total assets × 100

6. Dividend payout ratio = Total cash dividends / Profit (loss) attributable to owners of parent
		 × 100

3.	Debt-to-equity (D/E) ratio = Interest-bearing debt (fiscal year-end) /Equity (fiscal year-end)

38 FURUKAWA CO., LTD.

5. Total asset turnover = Net sales / Average total assets × 100

7. Dividends on equity (DOE) ratio = Total cash dividends / Average net assets × 100
8. Price book value ratio (PBR) = Stock price (fiscal year-end) / Net assets per share

Financial Analysis Data
2017/3

2018/3

2019/32020/32022/32021/3Per share amounts:* (Yen)
Basic earnings¥  105.29 ¥  118.16 ¥  116.23 ¥  112.23 ¥  190.73¥  165.87

Cash dividends
Net assets

50.00
1,922.04

50.00
2,104.07

50.00
1,978.09

50.00
1,926.32

50.00
2,348.53

50.00
2,505.01

Profitability: (%)
Cost of sales margin

84.2

84.9

84.8

84.1

86.1

86.9

Gross margin

15.8

15.1

15.2

15.9

13.9

13.1

SG&A expense margin

11.4

10.4

10.1

10.6

10.4

9.2

Operating margin

4.4

4.7

5.1

5.3

3.5

3.9

Ordinary margin
Return on sales

4.8
2.8

4.8
2.8

4.7
2.7

4.9
2.7

4.2
4.7

4.5
3.3

Efficiency and soundness:
Return on equity (ROE) (%) (Note 1)

5.9

5.9

5.7

5.8

8.9

6.9

Return on assets (ROA) (%) (Note 2)

2.1

2.2

2.1

2.1

3.5

2.9

Debt-to-equity (D/E) ratio (Times) (Note 3)

0.9

0.9

0.9

0.9

0.8

0.7

Equity-to-asset ratio (%) (Note 4)
Total asset turnover (Times) (Note 5)

37.3
0.7

38.3
0.8

36.3
0.8

36.0
0.8

42.0
0.7

42.3
0.9

Investment indicators:
Dividend payout ratio (%) (Note 6)

47.5

42.3

43.0

44.6

26.2

30.1

Dividends on equity (DOE) ratio (%) (Note 7)

2.7

2.4

2.4

2.5

2.3

2.0

Price book value ratio (PBR) (Times) (Note 8)

1.1

0.9

0.7

0.6

0.6

0.5

2,050
82,913

1,985
80,284

1,393
56,3401,060
42,872

1,336
52,205

1,289
50,043

25
465

26
410

26
477

22
477

21
474

22
417

5,347

6,884

7,160

7,039

5,912

6,347

Valuables

2,489

2,928

3,357

3,203

2,456

3,045

Waste

2,858

3,956

3,803

3,836

3,456

3,302

Stock price at fiscal year-end (Yen)Market capitalization (Millions of yen)
ESG Data
CO2 emissions (Thousand t)
Drain volume (Thousand m3)
Total emissions including waste, etc. (t)Energy (Thousand GJ)

458

483

511

438

427

472

Water resources (Thousand m3)

671

623

692

680

671

618

Number of directors (Persons)

9

9

9

9

9

9

Number of outside directors (Persons)

3

3

3

3

3

3
2,804

Number of employees (Persons)

2,616

2,690

2,757

2,755

2,752

Number of female employees (Persons)*

359

391

415

411

413

437

Total actual working hours (Hours)
Overtime hours (monthly average) (Hours)

2,064
20.65

2,138
26.85

2,117
25.40

2,083
22.36

1,952
15.22

1,986
18.8

LME copper price (average; US$/ton)

5,154

6,444

6,341

5,860

6,879

9,691

JPY rate per US$ (average for fiscal year)

108.42110.85110.91108.74106.06112.38

Copper production volume (Tons)

84,06288,004

81,346

77,06874,386

71,149Copper sales volume (Tons)

91,294

90,10385,146

83,863

81,99877,402Other Data* • The Company conducted a 1-for-10 stock consolidation of shares of common stock, effective October 1, 2017. In the above table, per-share figures for the fiscal 2017and prior years have been recalculated based on the number of shares outstanding after the stock consolidation.
• For number of female employees, only figures for fiscal 2016 and later are shown because numbers of male and female employees were not counted in some­categories before then.

Annual Report 2022

39

Management’s Analysis of Operating Results, Financial Position, and Cash Flows

Statement about Changes to English Financial
Statements
As a company listed on the Prime Market of the Tokyo Stock
Exchange, since April 2022 we have been translating and publishing financial statements and other materials into English for timely
disclosure. For financial statements and other information in thisreport, therefore, we use the English translation of our financial
statements, which are based on Japanese generally accepted
accounting principles (Japanese GAAP). Those financial statements(based on Japanese GAAP) have been properly audited by the firmthat audited the Company’s Annual Securities Report.

Operating Results
In fiscal 2022, ended March 31, 2022, consolidated net sales
amounted to ¥199,097 million, up ¥39,394 million from fiscal
2021, and operating profit totaled ¥7,734 million, up ¥2,142
million. As a result, the operating margin increased 0.4 point, to3.9%. The Industrial Machinery and UNIC Machinery segments
both reported higher sales and lower profit, but the Rock Drill
Machinery segment, which posted an operating loss in the previous fiscal year, reported increased sales and a return to profitability, resulting in higher sales and profit for the Machinery businessas a whole. In the Materials business, the Metals, Electronics,
and Chemicals segments all posted increases in both sales andprofit. Sales and profit in the Real Estate business were mostly
unchanged year on year.
Non-operating income increased ¥295 million, to ¥3,044
million, mainly due to a gain on the sale of scintillator crystal
manufacturing equipment (part of “Gain on sales of waste
goods”). Non-operating expenses rose ¥213 million, to ¥1,782
million, mainly due to expenses associated with the head officerelocation. As a result, ordinary profit increased ¥2,223 million(32.8%), to ¥8,996 million.
Among extraordinary items, we reported an ¥833 million gain
on bargain purchases (negative goodwill) resulting from theacquisition of shares in Yamaishi Metal Co., Ltd., which becamea subsidiary on October 1, 2021. However, total extraordinary
income declined ¥2,991 million (72.9%), to ¥1,113 million.
This was because in the previous fiscal year we posted a ¥4,078
million gain on sales of investment securities due to the sale ofstrategic shareholdings in two companies. Total extraordinary
losses were ¥972 million, mostly unchanged from ¥971 million
in the previous fiscal year. This was despite expenses of ¥668
million (¥730 million in the previous fiscal year) corresponding to
the progress of demolition work on the Furukawa Osaka Building.

Net Sales (Billions of yen)

167.6 174.1 165.2 159.7 199.0

Operating Profit (Billions of yen)
Operating Margin (%)

7.8

8.9

8.6

5.5

7.7

As a result, profit before income taxes decreased ¥769 million(7.8%), to ¥9,137 million.
Total income taxes (including enterprise tax, inhabitants’ tax,
and business tax) increased ¥213 million, to ¥2,450 million. The
effective tax rate was 26.8%, up 4.2 points from the previous
fiscal year, when there was an adjustment (–5.5 points) due to adecrease in the valuation allowance associated with the sale ofstrategic shareholdings. This was despite an adjustment (–2.9
points) in the fiscal year under review due to a gain on bargain
purchases (negative goodwill). Profit attributable to non-­controllinginterests increased ¥6 million, to ¥208 million. As a result of theabove, profit attributable to owners of parent decreased ¥990
million (13.3%), to ¥6,477 million.
Return on equity (ROE) declined 2.1 points, to 6.9%. Basicearning per share was down 13.0%, to ¥165.87.
Industrial Machinery
Sales in the Industrial Machinery segment amounted to ¥17,723
million, up ¥1,041 million year on year, and operating profit was¥1,396 million, down ¥717 million. During the year, we received
orders related to the construction of the upper part of the No. 3
elevated bridge on the Tokai-Kanjo Expressway Daian No. 2(Inabe, Mie Prefecture), the replacement construction of a pedestrian bridge in front of Kameido Station (Koto, Tokyo), and for a
SICON® enclosed hanging belt conveyor for construction of theShin-Kobotoke Tunnel on the Chuo Expressway. As a result, totalorders remained mostly unchanged year on year. Due to a decline
in materials machinery and project orders, however, the year-end
order balance was lower than the previous fiscal year-end. For theyear, we booked sales from large-scale projects, including cargohandling equipment for the Port of Onahama international bulk
terminal and a SICON® enclosed hanging belt conveyor for theconstruction of the No. 1 Tokyo Metropolitan Area Tunnel of the
Chuo Shinkansen (Kita-Shinagawa Construction Zone, Tokyo),while sales in the contractor business, covering bridges and otherprojects, increased year on year. However, profit from materials
machinery declined due to lower sales of parts, overhaul services,and the like.
Rock Drill Machinery
Sales in the Rock Drill Machinery segment amounted to ¥30,910
million, up ¥6,761 million, and operating profit was ¥1,117
million, compared with an operating loss of ¥1,324 million in theprevious fiscal year. That loss was due to the impact of the
COVID-19 pandemic. In the fiscal year under review, however, we

Profit Attributable to
Owners of Parent (Billions of yen)
Return on Sales (%)

Industrial Machinery
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

6.4

15.8 17.9 23.2 16.6 17.7

4.7

4.6

4.4

7.4

3.2
4.7

'18/3 '19/3 '20/3 '21/3 '22/3

5.1

5.3

3.9

'18/3 '19/3 '20/3 '21/3 '22/3
Operating Profit
Operating Margin

40 FURUKAWA CO., LTD.

3.5

2.8

2.0

4.7
2.7

2.7

3.3

'18/3 '19/3 '20/3 '21/3 '22/3
Profit Attributable to Owners of Parent
Return on Sales

1.0

2.1
1.3

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit

posted year-on-year sales increases both in Japan and overseas,leading to a significant improvement in earnings, and we returned
to profitability as a result. The yen’s depreciation also had aparticularly positive effect on overseas sales. Moreover, we
reported sales growth in all product categories. Specifically, salesof hydraulic crawler drills increased in North America, the Middle
East, Africa, and Southeast Asia. This was especially so in North
America as demand for construction machinery is strong. We also
reported increased sales of hydraulic breakers in Europe and North
America and auxiliary parts in Japan and North America.

of production volume following a review of the contracted
smelting ratio, but segment sales increased thanks to higher
overseas electrolytic copper market prices. Due to improved
profitability of the contracted smelting business stemming fromreduced copper production, as well as marginal gains due tohigher copper prices, segment operating profit also increased.
Electronics
Sales in the Electronics segment amounted to ¥7,271 million,up ¥1,530 million, and operating profit was ¥666 million,up ¥504 million. We posted an increase in sales of crystal products
due to higher demand for their use in discrete semiconductors.
We also reported growth in sales of coils owing to steady demand
from the automobile sector. This was despite the impact of automobile production cutbacks due to a shortage of semiconductors
and other factors from the second quarter. Sales of high-purity
metallic arsenic, both in Japan and overseas, benefited from stabledemand for compound semiconductors, a major application forthat material, while demand for aluminum nitride for use in thermal management components and semiconductor manufacturing
equipment increased, leading to higher overall segment sales.

UNIC Machinery
Sales in the UNIC Machinery segment amounted to ¥28,305
million, up ¥500 million, and operating profit was ¥2,165 million,
down ¥1,014 million. In Japan, a recovery in investment sentiment, which had been restrained in the previous fiscal year,
resulted in increased sales to wide-area rental and commercial
companies until the second quarter. From the latter half of thesecond quarter, however, sales declined due mainly to delays intruck production caused by difficulties in procuring overseas partsand delays in crane installation stemming from production cutbacks. In addition, the cost of sales ratio worsened due to hikes inprices of steel and other raw materials, resulting in a decrease indomestic operating profit. Overseas, we posted sales growth inChina thanks to increased shipments of UNIC cranes. However,sales in North America declined due to a decrease in shipments ofmini-crawler cranes as a shortage of building construction materials led to sluggish market recovery. With the added impact ofrising ocean freight prices, overseas operating profit remained
mostly unchanged year on year.

Chemicals
Sales in the Chemicals segment amounted to ¥7,896 million, up¥1,529 million, and operating profit was ¥743 million, up ¥363
million. Sales of cupric oxide increased due to higher unit prices,
mainly reflecting higher copper prices and strong demand forthe use of that material in circuit boards. Sales of cuprous oxide
increased owing to higher unit prices stemming from higher
copper prices. This was despite a decline in demand for shipbottom paints as disruption in ship operations caused by
COVID-19 led to lower demand for vessel repairs.

MetalsSales in the Metals segment amounted to ¥102,995 million, up¥26,900 million, and operating profit was ¥940 million, up ¥441
million. The overseas market price of electrolytic copper started
the year at US$8,768/ton, then made steady progress in the mid
to late of US$9,000/ton range due to economic recovery invarious European countries and projected demand for electricvehicles (EVs) and renewable energy. Russia’s invasion of Ukraine
pushed the price higher, to an all-time record of US$10,730/ton
on March 7, 2022, before ending the fiscal year at US$10,337/
ton. The domestic market price of electrolytic copper started theyear at ¥1.02 million/ton and ended at ¥1.33 million/ton. The
Company’s volume sales of electrolytic copper declined to 77,402
tons (down 4,596 tons year on year), due to the gradual reduction

Real Estate
Sales in the Real Estate segment amounted to ¥2,115 million, up¥7 million, and operating profit was ¥743 million, up ¥6 million.
Our main facility, the Muromachi Furukawa Mitsui Building­(commercial name: COREDO Muromachi 2), was affected by the
COVID-19 pandemic. For example, the national government
declared its third state of emergency in April 2021, and we closed
the entire building due to a request from the Tokyo Metropolitan
Government for emergency measures. It reopened with shortened
operating hours in May. In July, the national government declaredits fourth state of emergency (shifting from the reissue of priority
measures, such as epidemic prevention), which was rescinded at

Rock Drill Machinery
Net Sales (Billions of yen)
Operating Profit (loss) (Billions of yen)

UNIC Machinery
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

MetalsNet Sales (Billions of yen)
Operating Profit (Billions of yen)

Electronics
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

30.1 30.3 27.6 24.1 30.9

27.3 29.2 31.7 27.8 28.3

77.3 80.0 67.1 76.0 102.9

6.3

6.5

5.5

5.7

7.2

3.9
1.7

3.1

1.6

1.1

0.1

0

2.2

2.7

0.8

(1.3)
'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit (loss)

0.6

2.1

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit

0.5

0.3

0.4

0.9

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit

0.3

0.4
(0.0)

0.1

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit
Annual Report 2022

41the end of September. Then another pre-emergency status was
declared at the start of 2022. In short, our business was impacted
by COVID-19 throughout the fiscal year. In response, the Company
implemented some rent reductions and exemptions for commercial tenants, resulting in a decrease in revenue. On the other hand,overall rental revenues remained mostly unchanged year on year,
thanks mainly to an increase in the number of office tenants.
OthersThis segment covers metal powder, transportation, and otherbusinesses. For the fiscal year under review, segment sales totaled¥1,879 million, up ¥1,123 million, and operating profit was ¥17
million, compared with an operating loss of ¥82 million in theprevious fiscal year.

Financial Position
As of March 31, 2022, total assets amounted to ¥229,727 million,up ¥11,452 million from a year earlier. Current assets increased¥7,612 million (8.6%), to ¥96,238 million. This was mainly due toan ¥11,418 million (30.5%) rise in inventories stemming from anincrease in the volume of raw materials handled by the Metals
segment, as well as higher metal prices. By contrast, there was a¥3,279 million (18.5%) decrease in cash and cash equivalents.
Total non-current assets increased ¥3,839 million (3.0%), to¥133,489 million. Main factors were a ¥1,159 million (1.3%)
increase in property, plant and equipment associated with theconstruction of a new office building at the Oyama Works(Industrial Machinery segment), as well as a ¥1,410 million (4.1%)
rise in investment securities resulting mainly from a ¥1,187 million
increase in the market valuation of listed shareholdings.
Total liabilities at fiscal year-end amounted to ¥129,652 million,up ¥5,741 million (4.6%) from a year earlier. Current liabilities
rose ¥12,020 million (25.1%), to ¥59,859 million. Main factors
were a ¥9,594 million (33.1%) increase in payables (notes andaccounts payable–trade, electronically recorded obligations–­
operating, and accounts payable–other) and a ¥2,928 million(27.7%) increase in short-term borrowings (including current
portion of long-term debt). Non-current liabilities decreased¥6,278 million (8.3%), to ¥69,793 million, mainly due to a¥6,940 million (11.7%) decline in long-term borrowings.
Net assets increased ¥5,710 million (6.1%), to ¥100,075
million. This was mainly due to a ¥4,196 million (5.5%) increase intotal shareholders’ equity, stemming from ¥6,477 million in profit
attributable to owners of parent and ¥1,953 million in cash
dividends paid. Other factors included an increase in valuationdifference on available-for-sale securities due to a rise in themarket value of listed shareholdings, an increase in foreign

Chemicals
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

6.3

6.1

6.7

6.3

7.8

0.7
0.4

0.4

Real Estate
Net Sales (Billions of yen)
Operating Profit (Billions of yen)

3.3 2.9 2.3
1.3
1.1

2.1

0.7

0.5

42 FURUKAWA CO., LTD.

0.7

0.3

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit

0.7

2.1

'18/3 '19/3 '20/3 '21/3 '22/3
Net Sales
Operating Profit

currency translation adjustment due to the yen’s depreciation
during the fiscal year, an increase in remeasurements of defined
benefit plans due to amortization of unrecognized actuarial gains/losses and other factors, and a ¥1,286 million (8.4%) increase intotal accumulated other comprehensive income.
As a cash flow measure to address the impact of COVID-19, weraised ¥10 billion in working capital in May 2020. After repayments, the balance as of March 31, 2021 was ¥2 billion, which
we fully repaid in the fiscal year under review. As a result, equity
at fiscal year-end amounted to ¥97,253 million, and the equityto-asset ratio was 42.3%, up 0.3 point from a year earlier. The
debt-to-­equity (D/E) ratio improved 0.1 point, to 0.7 times.

R&D and Capital Investment
The Furukawa Company Group actively engages in R&D on
high-value-added products and new materials that meetwide-ranging market needs. In the fiscal year under review, total
research and development expenses amounted to ¥1,336 million,
up 14.8% from the previous fiscal year. Of this total, ¥25 million
was allocated to the Industrial Machinery segment, ¥55 million
to the Rock Drill Machinery segment, ¥240 million to the UNIC
Machinery segment, ¥8 million to the Metals segment, ¥114
million to the Electronics segment, and ¥197 million to theChemicals segment. We also spent ¥693 million on corporate
research aimed at developing basic technologies for each segment
and creating new businesses. This was allocated to all of thebusiness segments.
In fiscal 2022, capital investment (including purchase of­intangible fixed assets) increased 15.1%, to ¥4,778 million. Of
this total, ¥1,703 million was allocated to the Industrial Machinery
segment, ¥247 million to the Rock Drill Machinery segment, ¥718
million to the UNIC Machinery segment, ¥325 million to the
Metals segment, ¥265 million to the Electronics segment, and¥105 million to the Chemicals segment, aimed primarily at
improvements in production efficiency. In addition, ¥595 million
was allocated to the Real Estate segment to acquire land forbusiness use, and ¥817 million went to the Others segment,
mainly for relocations associated with the consolidation of theGroup’s head office functions and for measures to prevent pollution at suspended mines. Funds for these expenditures are
sourced from internal funds and borrowings. Depreciation
increased 3.2%, to ¥4,003 million.

Cash Flows
In the fiscal year under review, net cash provided by operating
activities amounted to ¥8,768 million, up ¥2,726 million from theprevious fiscal year. This was mainly due to an increase in adjusted

Net Assets (Billions of yen)
Return on Equity (ROE) (%)

Total Assets (Billions of yen)
Equity-to-asset Ratio (%)

87.0 80.4 77.9 94.3 100.0

222.2 215.3 209.6 218.2 229.7

8.9
5.9

5.7

5.8

6.9

38.3

36.3 36.0

42.0

42.3

'18/3 '19/3 '20/3 '21/3 '22/3'18/3 '19/3 '20/3 '21/3 '22/3

Net Assets
Return on Equity (ROE)

Total Assets
Equity-to-asset Ratio

income from non-cash profit/loss items and the like resulting fromthe increase in operating profit.
Net cash used in investing activities totaled ¥5,857 million,
compared with net cash provided by investing activities of¥2,245 million in the previous fiscal year (overall year-on-year
decrease of ¥8,102 million). This was mainly due to ¥5,572
million in purchases of property, plant and equipment and intangible assets (up ¥2,099 million year on year) and ¥107 millionin ­proceeds from sales of investment securities (down ¥5,444
million). The increase in purchases of property, plant and equipment and intangible assets was mainly due to a ¥1,883 million
increase in outlays for construction of a new office building at
the Oyama Works (Industrial Machinery segment). The Company
annually examines the appropriateness of continuing to holdstrategic shareholdings and sells them as necessary to makeeffective use of assets and improve financial soundness. In theprevious fiscal year, the Company sold investment securities inorder to secure liquidity on hand to immediately address emergency demand for funds arising from the COVID-19 pandemic.
By comparison, proceeds from sales of investment securities in
the fiscal year under review declined.
Net cash used in financing activities was ¥6,568 million, up¥3,445 million from the previous fiscal year. The main factor wasa net decrease in interest-bearing debt (borrowings, net of repayments) of ¥4,025 million (up ¥3,283 million from the previous
fiscal year). Of this net decrease, ¥2,000 million was due torepayment of working capital procured from financial institutions
to improve our cash position in light of the pandemic. (All of the¥10 billion raised in May 2020 has now been repaid.)
As a result, the year-end balance of cash and cash equivalents
totaled ¥14,468 million, down ¥3,279 million from a year earlier.

As stated in our news release on May 13, 2021, we decided topostpone the announcement of Medium-Term Business Plan
2022. For this reason, we have not disclosed our consolidated
cash flow allocation plan for the Group for the period from
April 2020 to March 2023, which is Phase 2 of Vision for 2025.
Nevertheless, we will continue to “actively promote investmentsthat contribute to increased corporate value” while aiming
to establish a robust financial foundation. At the same time,
we will endeavor to make optimal allocations of cash flows in­consideration of shareholder returns.
A summary of consolidated cash flow allocations for Phase 1(April 2017 to March 2020) and Phase 2 (April 2020 to March
2023, including forecasts) is shown in the table on the next page.

In our cash flow allocation (forecast) for fiscal 2023, we define
cash flow from operating activities as operating profit after tax
plus d­ epreciation (based on our fiscal 2023 forecast).
As for capital investment, our cumulative three-year allocationin Phase 1 totaled ¥16,403 million (capital investment and otherpayments of ¥16,394 million). In fiscal 2021, the allocation was¥4,144 million (capital investment and other payments of¥3,473 million) and in fiscal 2022 it was ¥4,778 million (capital­investment and other payments of ¥5,572 million). All of these­allocations centered on the core Machinery business.
As of March 31, 2022, we plan to make capital investment of¥8.3 billion in fiscal 2023 and beyond. Of this amount, in fiscal
2023 we have earmarked ¥2.8 billion to the Machinery business,
including for a medical waste treatment facility at Gunma Kankyo
Recycle Center Co., Ltd., and ¥1.6 billion to the Materials business, including for aluminum nitride production equipment, as
well as ¥4.7 billion for the Group as a whole. Going forward, we
will continue allocating capital investment that helps us enhance
our manufacturing capabilities, mainly in the Machinery business,in order to “actively promote investments that contribute toincreased corporate value.”
We also reduced interest-bearing debt (borrowings), from¥73,507 million on March 31, 2017 to ¥65,671 million on
March 31, 2022 (¥3,094 million reduction in Phase 1, ¥729
million in fiscal 2021, and ¥4,011 million in fiscal 2022). In addition, we plan to reduce interest-bearing debt by a further ¥4,000
million in fiscal 2023. Going forward, we will continue placing toppriority on improving efficiency and profitability without excessive
reliance on financial leverage, while endeavoring to improvefinancial soundness in order to achieve the financial targets set
for fiscal 2026, the final year of Vision for 2025, as set forth inMedium-Term Business Policy 2022, announced in May 2020.
The Furukawa Company Group places great importance on
improving returns of profits to all shareholders. Our basic policy
is to appropriate profits after comprehensive consideration ofvarious factors, including retained earnings required to financecapital investment and research and development expenses
necessary to bolster earnings, as well as future business development and other factors. We strive to return profits to shareholders
in a stable and ongoing manner. In principle, we aim to pay
annual dividends from retained earnings of ¥50.00 per share or
higher for a consolidated payout ratio of 30% or higher, based on
consolidated earnings (excluding extraordinary income/loss situations). In the three-year period of Phase 1, we made cumulative
appropriations from retained earnings of ¥5,958 million, for a
consolidated dividend payout ratio of 43.3%. In fiscal 2021, we
made a total of ¥1,953 million in appropriations from retained

Capital Investment (Billions of yen)
Depreciation (Billions of yen)

Cash Flows (Billions of yen)

Basic Earnings per Share (Yen)

Cash Dividends per Share (Yen)

6.0 2.2 8.7

118.16 116.23 112.23 190.73 165.87

50'18/3 '19/3 '20/3 '21/3 '22/3'18/3 '19/3 '20/3 '21/3 '22/3

 onsolidated Operating Cash Flow AllocationC
and Capital Strategy

5.0 3.2 5.4 3.4 5.9 3.5 4.1 3.8 4.7 4.0

5.3

11.7

8.4

50

50

50

50

0

(2.5) (4.2) (4.8)(5.8) (3.3) (5.0)'18/3 '19/3 '20/3 '21/3 '22/3
Capital Investment
Depreciation

(3.1)

(6.5)
(5.8)

'18/3 '19/3 '20/3 '21/3 '22/3
Cash Flows from Operating Activities
Cash Flows from Investing Activities
Cash Flows from Financing Activities

Annual Report 202243

earnings (¥50.00 per share), following by ¥1,941 million in fiscal
2022 (¥50.00 per share). In fiscal 2021, the consolidated dividend
payout ratio fell to 26.2%. This was due in part to an increase inbasic earnings per share stemming from the sale of strategic
shareholdings, as well as the posting of a gain on sales of investment securities (reported as extraordinary income) to secureliquidity on hand to immediately meet emergency demand forfunds to address COVID-19.
As announced in our news release on May 12, 2022, we plan
to pay annual dividends of ¥50.00 in fiscal 2023, for a consolidated dividend payout ratio of 41.3%.
With respect to treasury stock, over the three-year period of
Phase 1, we purchased a total of 1,186,300 shares, for a totalpurchase price of ¥1,628 million. In November 2020, we purchased 140,500 shares, for a total price of ¥164 million, andin March 2022 we purchased 251,700 shares, for a total priceof ¥334 million. We will continue contemplating the purchaseand cancellation of treasury stock as appropriate, taking into
­consideration stock price trends, capital efficiency, cash flows,
and other factors.

Analysis of Performance Indicators
Our Vision for 2025, FURUKAWA Power & Passion 150, willend in fiscal 2026 when we mark the 150th anniversary of theCompany’s founding. Under the Vision, we are targeting consolidated annual operating profit regularly in excess of ¥15 billion
and double-digit ROE. As Phase 1 of the Vision, we formulated
Medium-Term Business Plan 2019 (covering the three-year period
from fiscal 2018 to fiscal 2020), with targets of operating profit inthe ¥8.5 billion range and ROE in the 6–7% range. We achieved
our targets for consolidated operating profit for two consecutive
fiscal years (¥8.9 billion in fiscal 2019 and ¥8.6 billion in fiscal

2020), but ROE remained in the low 5% range for all three years,
falling short of our target.
As stated in our news release on May 13, 2021, we decided
to postpone the announcement of Medium-Term Business Plan
2022. For this reason, we have not disclosed our targets for fiscal
2023, the final year of Phase 2 of Vision for 2025. However, we
decided to announce our single-year consolidated performance
forecasts for fiscal 2022 and fiscal 2023 at the respective financial
results briefings (fiscal 2021 held in May 2021 and fiscal 2022 in
May 2022). In fiscal 2022, we reported operating profit of ¥7,734
million. Compared with fiscal 2017 (benchmark year for comparison purposes), operating profit of the Machinery business in fiscal
2022 increased 31%, operating profit of the Materials businessincreased 26%, and operating profit of the Real Estate segment
declined 41%. Of total consolidated operating profit, theMachinery business, positioned as a core business, accounted for
60% (53% in fiscal 2017 and 69% in fiscal 2021), the Materials
business accounted for 30% (28% in fiscal 2017 and 18% in
fiscal 2021), and the Real Estate business accounted for 10%(19% in fiscal 2017 and 13% in fiscal 2021).
We are also stepping up efforts to increase ROE. Among thecomponents of ROE, we are placing top priority on improving
profitability and efficiency. In addition to accurately monitoring
cost of capital, we practice business portfolio management thattakes cost of capital into account when allocating management
resources, including capital investment. In these ways, we will
work to establish an optimal business portfolio and pursue overall
optimization of management resource allocation. In fiscal 2020
(final year of Phase 1), ROE was 5.8% (5.9% in fiscal 2018 and5.7% in fiscal 2019). This was because, compared with fiscal
2017 (benchmark year), we reported a decline in profitability infiscal 2020, due mainly to deterioration in the return on sales

Consolidated Cash Flow Allocation(Millions of yen, rounded down)

FY2018–2020
cumulative

FY2021

FY2022

FY2023(prediction)

FY2021–2023
cumulative(prediction)

Cash flows from operating activities

25,537

6,042

8,768

8,956

23,767

Payments for capital investment, etc.

(16,394)(3,473)(5,572)(4,700)(13,746)

Payments/collections of other investments

2,078

5,718

(284)

Cash flows from investing activities(14,315)

2,245(5,857)(4,700)(8,311)

Free cash flow

11,221

8,287

2,911

4,256

15,456

Interest-bearing debt

(3,058)(741)(4,025)(4,000)(8,767)

Cash dividends(6,017)(1,961)(1,953)(1,941)(5,855)

Share buybacks(1,631)

(165)

(334)

(870)

(254)

(255)

(11,577)(3,123)(6,568)OthersCash flows from financing activities

5,434

(500)
(510)
(5,941)(15,633)

Financial Indicators

Financial
indicator

FY2017(base year forcomparisons)

FY2020

FY2021

FY2022

FY2026(Image)Debt-to-equity (D/E) ratio*1

0.9 times

0.9 times

0.8 times

0.7 times

0.6–0.7 times range

Interest-bearing debt to
EBITDA ratio*2

7.6 times

5.7 times

7.4 times

5.6 times

4–5 times

Issuer credit rating

BBB (JCR)BBB (JCR)BBB (JCR)BBB (JCR)

BBB+ or higher(Japanese rating agency)*1 Debt-to-equity (D/E) ratio = Interest-bearing debt (fiscal year-end) ÷ Equity (fiscal year-end)*2 Interest-bearing debt to EBITDA ratio = Interest-bearing debt (fiscal year-end) ÷ [Operating profit + Depreciation]

44 FURUKAWA CO., LTD.

caused by a ¥1,029 million loss on valuation of investment securities (reported as an extraordinary loss). In fiscal 2021, consolidated
net sales declined ¥5,513 million year on year, mainly due tolower sales in the Machinery business stemming from the spreadof COVID-19. However, we posted a ¥4,078 million gain on salesof investment securities (reported as extraordinary income),
leading to improved profitability and an ROE of 8.9%. In fiscal
2022, consolidated net sales jumped ¥39,394 million year on
year, thanks mainly to a significant increase in sales of the Metals
segment stemming from higher overseas market prices for electrolytic copper. Thanks also to a major improvement in operating
profit in the Rock Drill Machinery segment, we posted increases inboth operating profit and ordinary profit. However, we reported a
year-on-year decline in extraordinary income compared with fiscal
2021, when we posted a gain on sales of investment securities.
This negatively affected the return on sales and led to a decline
in profitability, resulting in ROE of 6.9%.

In order to strengthen and instill efforts to improve ROE, we have
set return on assets (ROA) as a performance and management
indicator for each segment, and we are working to improve
profitability (operating margin) and efficiency (total asset turnover), which are components of ROA. Our ROA results by segment in fiscal 2017 (benchmark year), fiscal 2020 (final year of
Phase 1), fiscal 2021, and fiscal 2022 are shown in the tablepages 46 to 47.

screens, briquetting machines, and certain types of plant equipment for a section plant construction project as a result of ourtechnical proposals, which greatly contributed to business performance improvement. As a result, segment ROA improved 12.9
points, from 0.5% in fiscal 2017 to 13.4% in fiscal 2020 (final
year of Phase I), but fell to 8.8% in fiscal 2021, mainly due tolower profit from large-scale projects, the majority of which werecompleted in the previous fiscal year. In fiscal 2022, profitability(operating margin) deteriorated to 6.0%, mainly due to lower
profits from material machinery parts and overhaul services. Thiswas despite increased sales from large-scale projects and thecontractor business, including construction of bridges. Meanwhile,
the Industrial Machinery segment is receiving increasing inquiries about belt conveyors as an earth conveying method that
addresses social issues. Accordingly, we are stepping up information gathering with the aim of encouraging the adoption of ourbelt conveyors in new dam construction and rehabilitation workfor national land resilience and disaster prevention/mitigation,
as well as in river flood control work. In material machinery, we
are aiming to win orders for section plant construction projects
centered on the “GEOPUS C3” (cone crusher), which is a strategic
machine. Over the two-year period from April 2022 to March
2024, we will invest approximately ¥2.6 billion to reinforce theearnings base of the Industrial Machinery segment, which is now
generating steady profits. This will include expansion of a medical waste treatment facility at Gunma Kankyo Recycle Center
Co., Ltd.

Industrial Machinery
In Phase 1, the Industrial Machinery segment strengthened its
engineering capabilities, which enabled it to expand its contractor
business. In material machinery, we attracted orders for crushers,

Rock Drill Machinery
In Phase 1, the Rock Drill Machinery segment enjoyed steadydomestic shipments of hydraulic breakers and hydraulic crawler
drills on the back of solid demand for tunnel drill jumbos andSegment Analysis

Performance

Operating profit(Billions of yen)
20

Indicators

ROE
Double-digit

18

12

16

10

8.9

14
12

6.9

10

5.9

5.8

8
6

8.6

4

Operatingprofitregularly inexcess of¥15 billion

7.7

6.5

8
6
4
2

5.5

2

0

0

Performanceindicators

ROE
(%)
14

FY2017(base year forcomparisons)

FY2020

FY2021

FY2022

FY2026(Image)¥6.5 billion¥8.6 billion¥5.5 billion¥7.7 billion

Regularly in excess of ¥15 billion

5.9%

5.8%

8.9%

6.9%

ROE Double-digit

OperatingprofitROE

ROE Breakdown Analysis
ROE

Profitability
Return on sales

Efficiency
Total asset turnover

Leverage
Financial leverage

FY2017 (results)

:

5.9%

2.84%

0.74 times

2.80 times

FY2020 (results)

:

5.8%

2.68%

0.78 times

2.76 times

FY2021 (results)

:

8.9%

4.68%

0.75 times

2.56 times

FY2022 (results)

:

6.9%

3.25%

0.89 times

2.37 times

Profitability: Improved

Efficiency: Improved

Leverage: Down

Initiatives to Improve ROE

Annual Report 202245

urban redevelopment and construction investments, as well as
improved profitability (operating margin) overseas due largely tostrong shipments of hydraulic crawler drills, mainly in Europe andthe United States. As a result, segment ROA moved from 2.9%
in fiscal 2017 to 5.7% in fiscal 2018 and 5.0% in fiscal 2019. In
fiscal 2020 (final year of Phase 1), however, ROA fell to 0.4% (2.5
points below the fiscal 2017 benchmark figure). This was due todeterioration in profitability (operating margin) stemming fromincreased costs associated with making our hydraulic crawler drills
compliant with exhaust emission regulations in developed countries, as well as increased depreciation and other expenses resulting from capital investments in the Takasaki Yoshii Works thatbegan in fiscal 2018. Efficiency (total asset turnover) also deteriorated due to increased investments in inventories and fixed assets.
In fiscal 2021, the segment posted an operating loss due to the
spread of COVID-19, resulting in segment ROA of –3.8%. In fiscal
2022, the segment posted a significant improvement in performance, returning to profitability on the back of increases in both
domestic and overseas sales. In addition to this improved profitability (operating margin), we posted enhanced efficiency (total
asset turnover), mainly due to an improvement in inventory turnover as a result of an enhanced receivables turnover and efforts tooptimize inventory levels. This resulted in segment ROA of 3.2%.
Going forward, we will clarify our product- and region-specificstrategies and reorganize and consolidate overseas subsidiaries
accordingly. Through these and other structural reforms, we willcontinue our transformation from a ­“volume-­oriented” to a“profit-oriented” organization.
UNIC Machinery
In Phase 1, the UNIC Machinery segment reported an increase
in total assets associated with a capital investment program the
Sakura Works started in fiscal 2017, as well as higher production
costs due to rising steel prices, increased depreciation, andother factors. In Japan, we undertook a full model change of our“G-FORCE” series of UNIC cranes, releasing new models featuring
improved levels of operability and safety. Overseas, we reorganized our sales network and strengthened our sales capabilities
while expanding and reinforcing our production bases formachines destined for export. We also began to reap the benefitsof capital investments in the Sakura Works, which are now
contributing to improved production efficiency and profitability(operating margin). As a result, segment ROA improved 1.8
points, from 11.2% in fiscal 2017 (benchmark year) to 13.0%
in fiscal 2020 (final year of Phase 1). In fiscal 2021, there was asignificant fall in domestic shipments compared with the previous
fiscal year, when there was a rush in demand and increased
shipments ahead of a partial revision of mobile crane structural
standards. Overseas shipments also declined, mainly to regions
highly affected by the spread of COVID-19, leading to a year-onyear decline in segment sales. As a result, both efficiency (asset
turnover) and profitability (operating margin) declined and segment ROA in fiscal 2021 was 10.4%. In fiscal 2022, profitability(operating margin) declined to 7.2% due to lower sales in Japan,
stemming mainly from truck production delays caused by overseas
parts supply difficulties and delays in crane installations due to
production cutbacks. The cost of sales ratio also deteriorated
due to price hikes of steel and other raw materials. In the UNIC
Machinery segment, the fixed asset turnover ratio is deteriorating
due to increased depreciation costs associated with capital investments in the Sakura Works. Our challenge going forward, therefore, is to maximize the benefits of our capital investments while
improving profitability (operating margin).
MetalsIn Phase 1, ROA of the Metals segment declined 5.1 points, from
6.2% in fiscal 2017 (benchmark year) to 1.1% in fiscal 2020 (final
year of Phase 1). This was due to deteriorating profitability

Consolidated
ROA
ROA Transition
by Segment
Consolidated

Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

3.2%

0.7

4.4%

6,545

FY2021

2.6%

0.8

3.5%

5,592

FY2020 (base final year for Phase 1)

4.1%

0.8

5.3%

8,693

FY2022

3.5%

0.9

3.9%

7,734

ROA Transition by Segment
Industrial MachineryOperating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

0.5%

0.9

0.6%

104

FY2021

8.8%

0.8

10.7%

2,113

FY2020 (base final year for Phase 1)

13.4%

1.1

12.2%

3,208

FY2022

6.0%

0.9

6.8%

1,396

Rock Drill MachineryOperating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

2.9%

0.9

3.3%

897

FY2021(3.8%)

0.7(5.5%)(1,324)FY2020 (base final year for Phase 1)

0.4%

0.8

0.5%

142

FY2022

3.2%

0.9

3.6%

1,117

UNIC MachineryOperating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

11.2%

1.1

9.9%

2,578

FY2021

10.4%

0.9

11.4%

3,180

FY2020 (base final year for Phase 1)

13.0%

1.0

12.5%

3,992

FY2022

7.2%

0.9

7.6%

2,165

46 FURUKAWA CO., LTD.

(operating margin), which declined from 2.6% in fiscal 2017 to1.1% in fiscal 2018, 0.7% in fiscal 2019, and 0.5% in fiscal 2020.
In fiscal 2021, however, a significant rise in metal prices compensated for a decline in profits from contracted copper smelting,leading to year-on-year improvements in efficiency (asset turnover) and profitability (operating margin), resulting in segment
ROA of 1.7%. In fiscal 2022, the segment reported increases inboth sales and operating profit thanks to higher metal prices, aswell as improved profitability of the contracted copper smelting
business due to lower copper production. As a result, both efficiency (asset turnover ratio) and profitability (operating margin)improved, resulting in segment ROA of 2.8%. Profit in this segment fluctuates significantly, because raw copper ore and bullion
products are affected by international market trends—including
supply–demand balance, speculative transactions, and geopoliticaland economic conditions—while smelting profitability is impacted
by copper concentrate purchasing conditions. In particular, therecent copper smelting business environment has been characterized by worsening ore purchasing conditions due to an unstablesupply–demand balance against a backdrop of strong purchasing
demand, mainly from China. In addition, smelters are increasing
their investments in environmental measures, as well as in maintenance and renewal of aging facilities, and therefore face significant depreciation expenses and soaring operating costs. As aresult, smelting costs remain high, and achieving profitability inthis business is becoming more difficult every year. Under suchconditions, we decided to undertake a fundamental review of thecontracted copper smelting business as a priority issue, as it isdifficult to recognize its business viability. As announced in our
news release on May 12, 2022, we decided to terminate ourcontracted copper smelting agreement with Onahama Smelting
and Refining Co., Ltd., to which we consign approximately 34%(around 24,000 tons) of our annual copper production. The­termination takes effect on March 31, 2023. As a result, we

Metalsexpect our annual copper production to decline to around 46,600
tons, with Hibi Kyodo Smelting Co., Ltd., an equity-method affiliate, remaining as our sole contracted smelting operation. Since
our domestic sales volume of electrolytic copper is roughly 40,000
tons per year, we believe we can now significantly reduce exports,
which are unprofitable. This will pave the way for a drastic review
aimed at securing the profitability of the contracted copper smelting business, a priority issue for the Metals segment, and also help
improve segment ROA.
Electronics
In Phase 1, this segment benefited from healthy demandfor compound semiconductors—the main application for
high-purity metallic arsenic, which is positioned as a mature­product—as well as steady demand for crystal products used inindividual semiconductor devices. These resulted in improved­profitability (operating margin), with ROA of 4.5% in fiscal 2018
and 5.7% in fiscal 2019. Due to subsequent deterioration of thesemiconductor market, however, sales and profit of mature products declined, and this segment posted an operating loss in fiscal
2020 (final year of Phase 1), with ROA falling to –0.5%, down
0.7 point from fiscal 2017 (benchmark year). In fiscal 2021, we
benefited from a recovery in demand for coils and crystal products from the second quarter. Sales of high-purity metallic arsenic
were boosted by stable demand for compound semiconductors,
while demand for aluminum nitride for use in thermal management components and semiconductor manufacturing equipment
components increased, leading to higher overall segment revenue.
As a result, the segment returned to profitability, offsetting theprevious fiscal year’s operating loss, and posted a year-on-year
improvement in profitability (operating margin), resulting in segment ROA of 2.3%. In fiscal 2022, we again achieved improvements in both profitability (operating margin) and efficiency (asset
turnover ratio) thanks to year-on-year increases in segment sales

Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

6.2%

2.4

2.6%

1,738

FY2021

1.7%

2.6

0.7%

499

FY2020 (base final year for Phase 1)

1.1%

2.5

0.5%

301

FY2022

2.8%

3.1

0.9%

940

Electronics

Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

0.2%

0.8

0.3%

17

FY2021

2.3%

0.8

2.8%

161

FY2020 (base final year for Phase 1)(0.5%)

0.8(0.6%)(35)

FY2022

9.0%

1.0

9.2%

666

Chemicals

Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

0.7%

0.3

2.1%

114

FY2021

2.3%

0.4

5.9%

380

FY2020 (base final year for Phase 1)

3.1%

0.4

7.6%

510

FY2022

4.4%

0.5

9.4%

743

Real Estate

Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)Operating
Total
ROA
ProfitOperatingAsset(Operating(MillionsTurnover Margin
Profit)of yen)(Times)

FY2017 (base year for comparisons)

4.0%

0.1

39.4%

1,265

FY2021

2.8%

0.1

34.7%

736

FY2020 (base final year for Phase 1)

2.7%

0.1

30.7%

735

FY2022

2.8%

0.1

34.9%

743

Annual Report 2022

47

and operating profit, resulting in segment ROA of 9.0%. In fiscal
2023, we plan to invest approximately ¥900 million to increase
aluminum nitride production to meet growing demand forheat-dissipating components due to advances in sophistication,
integration, miniaturization, and thinning of electronic devices.
In the process, we will reinforce the earnings foundation ofthis segment.
Chemicals
In Phase 1, growth in sales of both existing products (such as
sulfuric acid, cuprous oxide, and cupric oxide) and high-valueadded sulfuric acid contributed to increased earnings in thissegment. As a result, profitability (operating margin) showed
overall improvement, from 2.1% in fiscal 2017 to 7.1% in fiscal
2018, 6.6% in fiscal 2019, and 7.6% in fiscal 2020 (final year of
Phase 1). As a result, segment ROA rose 2.4 points, from 0.7%
in fiscal 2017 (benchmark year) to 3.1% in fiscal 2020. In fiscal
2021, sales of cupric oxide increased due to strong demand for its
use in circuit boards. However, sales of cuprous oxide decreased
due to weak overall demand for marine vessel paints, while theimpact of COVID-19 and inventory adjustments by customers
led to a decline in sales of sulfuric acid. As a result, profitability(operating margin) deteriorated, resulting in segment ROA of
2.3%. In fiscal 2022, we again achieved improved profitability(operating margin) thanks to continued strong demand for cupricoxide for use in circuit boards, as well as higher unit sales prices,
mainly driven by rising copper prices, resulting in increased­segment sales and operating profit and ROA of 4.4%. Goingforward, we will consider investments to increase production
capacity for cupric oxide. We will also work to increase earnings
from existing products, strengthen the differentiation and development of high-quality sulfuric acid, and commercialize andcultivate our metallic copper powder products.
Real Estate
In Phase 1, we closed the Furukawa Osaka Building in December
2019. Until then, rental income decreased as tenants moved out.
However, the Muromachi Furukawa Mitsui Building (commercial
name: COREDO Muromachi 2), which is our main facility,­continued operating smoothly, but rental income declined due
to a decrease in floor space occupied by large tenants from thefourth quarter of fiscal 2019. As a result, profitability (operating
margin) showed overall decline, from 39.4% in fiscal 2017 to39.9% in fiscal 2018, 38.5% in fiscal 2019, and 30.7% in fiscal
2020 (final year of Phase 1). As a result, segment ROA in fiscal
2020 was 2.7%. In fiscal 2021 and 2022, the national government declared states of emergency and the Tokyo Metropolitan
Government requested emergency and other priority measures
to prevent the spread of COVID-19. In response, we reduced or
exempted rents for some commercial tenants of the Muromachi
Furukawa Mitsui Building, which was affected by temporary
closures and a decrease in visitors over the two-year period.
However, we benefited from new tenants moving in following a
reduction in the number of large office tenants. As a result, segment ROA in fiscal 2022 improved slightly, to 2.8%. Seeking toeffectively utilize our business resources, we will work to enhance
efficiency (total asset turnover) by selling idle assets and assetsthat are no longer expected to contribute to earnings. In addition
to securing stable earnings from the Muromachi Furukawa Mitsui
Building, we are in the final stages of determining the future
concept of the Furukawa Osaka Building, which we began demolishing in fiscal 2021, and we will strive to shape that concept as apriority issue.
48 FURUKAWA CO., LTD.

Business Risks(1) Foreign Exchange Fluctuations
The Furukawa Company Group engages in production, procurement, and sales activities in Japan and overseas, and therefore is
at risk of foreign exchange fluctuations in connection with its
export business, the import of raw materials, primarily copper ore,and smelting and processing income. While the Group utilizes
foreign exchange contracts and other methods to mitigate thisrisk, its operating results and financial position may be adversely
affected by significant movements in exchange rates.
(2) Fluctuations in Nonferrous Metals Markets
International prices of electrolytic copper, a mainstay productof the Group, and other nonferrous metals are decided by the
London Metals Exchange (LME) in U.S. dollars to reflect international market conditions. Such prices fluctuate according to theinternational supply–demand balance, speculative transactions,international political and economic circumstances, and the like.
Accordingly, the Group utilizes forward delivery transactions andother hedging techniques to minimize the impact of fluctuating
LME prices. However, significant movements in such prices may
affect the Group’s operating results and financial position.
The Group also invests in overseas copper mines to procure
copper concentrate. Any fluctuations in LME prices may impact
the business performance of those mines, which may affect theGroup’s operating results and financial position.
(3) Interest Rates
The Group’s fiscal year-end balance of interest-bearing debt was¥65,671 million, equivalent to 28.6% of total assets. Any increasein debt-related costs arising from changes in interest rates may
adversely affect the Group’s operating results and financial position. Although funding costs may increase if market interest rates
rise, the Group has prepared for sudden changes in interest rates
by utilizing an optimal combination of borrowing ­arrangements,
including fixed-rate instruments.
(4) Investment Securities and Land
Historically, the Furukawa Company Group has maintained
holdings of investment securities, which are subject to market
valuations, as well as land. As of March 31, 2022, the carrying
value of such securities as stated in the consolidated balance
sheets was ¥30,316 million, while land stood at ¥54,170 million.
Accordingly, the Group’s operating results and financial position
are at risk of impairment losses, losses from devaluation, andlosses on sales if securities and land prices decline significantly.
Regarding securities, every year the Board of Directors comprehensively considers the benefits and risks associated with individual holdings, both qualitatively and quantitatively, in order toverify the suitability of maintaining such holdings. Securities
judged to be unsuitable as a result of such verification are sold.
As for other fixed assets held by the Group, a significant deterioration of business conditions could result in a decline in profitability, while falling market prices could lead to impairment losses.
Any of these factors may adversely affect the Group’s operating
results and financial position.
(5) Fluctuations in Demand
The Furukawa Company Group’s products are sold both in Japanand overseas. Therefore, any major fluctuations in demand inits major markets—such as Japan, North America, Europe, andAsia—may adversely affect the Group’s operating results andfinancial position.

Due to the nature of its products, moreover, sales from domestic
public works projects account for a high proportion of net sales.
Therefore, any major fluctuations in public investments may
adversely affect the Group’s operating results and financial
position.

profit margins because they are difficult to differentiate fromthe competition. If the Group is unable to develop or market
new products that will become future pillars of such businesses,
its operating results and financial position could be affected asa result.

(6) Country Risk
The Furukawa Company Group conducts its production, procurement, and sales activities on a global basis in order to expand
its sales network, strengthen cost-competitiveness, and reduce
currency risk. Any number of local events could hamper theGroup’s smooth business operations. These include local politicalunrest, sharp economic slowdown, deterioration of public security, trade sanctions, cultural and legal differences, special labor–
management relations, and terrorism. Such events could affect
the Group’s operating results and financial position.
The invasion of Ukraine by Russia may cause a decline in sales
due to suspension of shipments of products to Russia, an increasein costs due to higher prices for steel and other raw materials andfuel, and a decrease in production due to delays in the procurement of raw materials. Any of these factors could affect theGroup’s operating results and financial position.

(10) Human Resources
To achieve future growth, the Group hires talented people—both
new graduates and mid-career professionals—and provides
training to enhance their competitive strengths. If the Groupis unable to attract sufficient human resources required for its
business, however, its operating results and financial position
could be affected as a result.

(7) Natural Disasters, Infectious Diseases, andOther Force Majeure
The occurrence of natural disasters (such as earthquakes, tsunamis, floods, and typhoons) and accidents (such as large-scale fires)
could cause substantial damage to the Group’s production facilities and procurement sources and a breakdown of its distribution
network. Also, the worldwide spread of infectious diseases, suchas COVID-19, could render inoperable the Group’s business
operations and owned facilities, as well as the operations of its
suppliers. Either of these events may prevent the Group fromsupplying products in a reliable manner, which could affect its
operating results and financial position.
It remains uncertain when the COVID-19 pandemic, which
emerged in early 2020, will be contained. The Group takes measures to prevent infections among its employees, including hygiene
management and telecommuting. However, new outbreaks due
to virus mutations or other factors may cause a decrease in sales
due to shutdown of operations or stagnation of supply chains
stemming from employee infections, or suspension or reduction ofcustomers’ business operations. Any of these factors could affect
the Group’s operating results and financial position.
(8) Product Quality
The Group manufactures products in accordance with globally
recognized quality control standards and strives constantly toestablish, maintain, and improve its quality assurance system.
However, there is no guarantee that all products will be defectfree in the future. To mitigate such risk, we take out productliability insurance, recall insurance, and the like. However, in theevent that a product defect leads to major liability claims or recallsthat exceed our expectations, public trust in the Group and its
products may be lost, which could affect its operating results andfinancial position.
(9) New Product Development
The Group actively engages in new product development withthe aim of bringing to market products incorporating new technologies and functions that meet customer needs. In some of ourbusinesses, however, there are products that are in mature stagesof their life cycles. Such products may be subject to reduced(11) Environmental Protection
The Furukawa Company Group places the highest importance on
environmental protection, environmental safety, and preventionof pollution at its various business sites, both in Japan and overseas, respecting all laws and regulations. Furthermore, in Japan
the Group takes all necessary measures to ensure proper environmental management of suspended and closed mines, including
prevention of water pollution from such mines, as well as managing the safety of tailing dams. Due to changes in relevant regulations, however, legislation may be tightened and unexpected
situations may arise at each business site, which could increase
the cost of responding and thus affect the Group’s operating
results and financial position.
(12) Official Regulations
The Furukawa Company Group engages in business in Japan andoverseas and thus is subject to legal regulations of various nations,
including rules related to licensing, taxation, the environment,labor, antitrust, and export controls. The Group takes care tofaithfully comply with such official regulations. Due to changes inlaws and regulations, however, existing legislation may be tightened or new legislation enacted, which could increase the cost of
responding and impact business continuity, and thus affect theGroup’s operating results and financial position.
The invasion of Ukraine by Russia may lead to a decrease in sales
due to export restrictions on products destined for Russia, which
may affect the Group’s operating results and financial position.
(13) Retirement Benefit Obligation
The employees of the Furukawa Company Group are covered bya defined benefit corporate pension plan and a non-contributory
funded employee pension plan. Liability for retirement benefits isprovided at an amount calculated based on the retirement benefit
obligation and the fair value of pension plan assets at the balance
sheet date as of March 31, 2022. In calculating retirement benefit
obligation, the Group adopts assumptions in connection with thediscount rate and expected rate of return on plan assets, as wellas other assumptions. However, the Group’s operating results andfinancial position are at risk in the event that the actual discountrate and expected rate of return on plan assets differ materiallyfrom the assumptions, as well as in the event of a change in theassumptions on which retirement benefit obligation are made.
Forward-looking statements in the above section are based on
judgments of the Group as of June 29, 2022.

Annual Report 202249

Consolidated Financial Statements
Consolidated balance sheets
Furukawa Co., Ltd. and consolidated subsidiaries
As of March 31, 2022 and 2021
(Millions of yen)

FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥ 17,748¥ 14,469

28,030——28,344Merchandise and finished goods

15,99017,205Work in process

9,839

10,813

Raw materials and supplies

11,58920,818

Other

5,568

4,635

Allowance for doubtful accounts

(141)

(48)

88,62596,238

		 Buildings and structures, net

22,54024,051

		 Machinery, equipment and vehicles, net

9,042

8,789

		Land53,43654,170537

429

		 Construction in progress

1,271

517

		Other, net

2,988

3,018

		 Total property, plant and equipment

89,817

90,976341

376

		Investment securities

34,44935,860		 Long-term loans receivable

4,086

4,495

		 Deferred tax assets—

351

		 Retirement benefit asset

194

403

		Other

1,334

1,746

		 Allowance for doubtful accounts

(573)

(720)

		 Total investments and other assets

39,49042,136

129,649

133,489¥218,275¥229,727

AssetsCurrent assets
Cash and deposits
Notes and accounts receivable—trade
Notes and accounts receivable—trade, and contract assets

Total current assets

Non-current assets
Property, plant and equipment

		 Leased assets, net

Intangible assets

Investments and other assets

Total non-current assets
Total assets

50 FURUKAWA CO., LTD.

(Millions of yen)

FY2021

FY2022(As of March 31, 2021)(As of March 31, 2022)¥ 11,638¥ 15,916

Liabilities
Current liabilities
Notes and accounts payable—trade
Electronically recorded obligations—operating

6,863

9,381

Short-term borrowings

10,575

13,504219

188

Accounts payable—other

10,511

13,310

Income taxes payable

1,054

1,491

Provision for bonuses

110

138

7

3

Lease liabilities

Provision for environmental measures
Other

6,859

5,924

Total current liabilities

47,83959,85959,10752,166

Non-current liabilities
Long-term borrowings

393

302

Deferred tax liabilities

9,761

10,501

Deferred tax liabilities for land revaluation

1,402

1,399

Retirement benefit liability

2,709

2,543

86

58

Lease liabilities

Provision for environmental measures
Other provisions

16

16

Asset retirement obligations

234

239

2,360

2,565

Other

76,071

69,793

123,910

129,652

28,20828,2082

2

Retained earnings

50,02554,557

Treasury shares(1,862)(2,197)

Total shareholders’ equity

76,37380,57011,303

11,832

Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

351

(292)

Revaluation reserve for land

2,609

2,602

Foreign currency translation adjustment

(826)

35

Deferred gains or losses on hedges

Remeasurements of defined benefit plans

1,959

2,506

Total accumulated other comprehensive income

15,396

16,683

Non-controlling interests

2,594

2,821

Total net assets

94,364

100,075¥218,275¥229,727

Total liabilities and net assets

Annual Report 2022

51

Consolidated statement of income and consolidated statement of comprehensive income
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2022 and 2021

Consolidated statement of income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Freight and incidental costs
Salaries, allowances and bonuses
Provision for bonuses
Provision for retirement benefits
Provision of allowance for doubtful accounts
Research and development expenses
Other
Total selling, general and administrative expenses
Operating profit
Non-operating income
Dividend income
Share of profit of entities accounted for using equity method
Foreign exchange gains
Gain on sales of waste goods
Other
Total non-operating income
Non-operating expenses
Interest expenses
Administrative expenses of inactive mountain
Other
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on bargain purchase
Other
Total extraordinary income
Extraordinary losses
Loss on sale and retirement of non-current assets
Demolition expenses of a rental building
Other
Total extraordinary losses
Profit before income taxes
Income taxes—current
Income taxes—deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Millions of yen)

FY2021

FY2022(Fiscal year ended
March 31, 2021)(Fiscal year ended
March 31, 2022)¥159,702
137,508
22,194¥199,097
172,995
26,101

2,114
7,309
35
508
4
732
5,896
16,601
5,592

2,465
7,557
108
629
16
1,053
6,535
18,366
7,734

749
355
702
65
876
2,749

752
370
677
497
746
3,044

456
769
342
1,568
6,773

427
812
543
1,782
8,996

—
4,105
4,105

833
280
1,113

151
730
89
971
9,907
2,172
65
2,237
7,670
201
¥  7,468

157
668
146
972
9,137
2,715
(264)
2,450
6,686
208
¥  6,477

Consolidated statement of comprehensive income

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests
52 FURUKAWA CO., LTD.

(Millions of yen)

FY2021

FY2022(Fiscal year ended
March 31, 2021)(Fiscal year ended
March 31, 2022)¥ 7,670¥6,686

5,941
641
(434)
4,756
(31)
10,873
18,543

527
(483)
723
547
20
1,335
8,021

18,350
193

7,771
250

Consolidated statement of cash flows
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2022 and 2021
(Millions of yen)

FY2021

FY2022(Fiscal year ended
March 31, 2021)(Fiscal year ended
March 31, 2022)¥ 9,907¥ 9,137

Depreciation

3,879

4,003

Share of loss (profit) of entities accounted for using equity method

(355)

(370)

—

(833)

Cash flows from operating activities
Profit before income taxes

Gain on bargain purchase
Increase (decrease) in retirement benefit liability

184

433

Interest and dividend income

(929)

(878)

Interest expenses

456

427

Foreign exchange losses (gains)

(432)

(421)

Decrease (increase) in trade receivables

2,550

345

645

(10,328)

Increase (decrease) in trade payables(1,259)5,955

Increase (decrease) in accounts payable—other(2,560)3,700

Other, net(5,386)(467)
10,703

Decrease (increase) in inventories

Subtotal

6,699Interest and dividends received

1,004

885

Interest paid

(462)

(429)

(1,863)(2,484)

664

94

6,042

8,768

(3,403)(5,507)

Income taxes paid
Other, net
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property, plant and equipment

—

(352)

Other, net

5,648

3

Net cash provided by (used in) investing activities

2,245(5,857)

Proceeds from short-term borrowings

10,33015,957

Repayments of short-term borrowings(10,465)(16,062)

Proceeds from long-term borrowings

10,426

220

Repayments of long-term borrowings(11,034)(4,140)

Repayments of finance lease liabilities

(232)

(232)

Purchase of treasury shares

(165)

(334)

(1,961)(1,953)

(22)

(22)

(3,123)(6,568)Purchase of shares of subsidiaries resulting in change in scope of consolidation

Cash flows from financing activities

Dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents

(63)

377

5,101

(3,279)Cash and cash equivalents at beginning of period

12,646

17,748Cash and cash equivalents at end of period¥17,748¥14,468

Annual Report 202253

Consolidated statement of changes in equity
Furukawa Co., Ltd. and consolidated subsidiaries
For the years ended March 31, 2022 and 2021

Fiscal year ended March 31, 2021

(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

Total
shareholders’ equity¥28,208¥—¥44,507¥(1,697)¥71,018

Changes during period
Dividends of surplus(1,960)(1,960)

Profit attributable to owners of parent

7,468

7,468

Purchase of treasury shares(165)

Reversal of revaluation reserve for land

(165)

10

Merger of consolidated subsidiaries

10

2

2

Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

—

2

5,518

(165)

5,355

¥28,208¥ 2¥50,025¥(1,862)¥76,373

Fiscal year ended March 31, 2021

(Millions of yen)
Accumulated other comprehensive income
Total
Valuation
DeferredForeignaccumulateddifference on
gains or Revaluation currency Remeasurements
Nonotheravailable-for-sale losses
reservetranslationof definedcomprehensive controllingsecurities
on hedges for land adjustment benefit plansinterests
incomeBalance at beginning of period¥ 5,363¥(322)¥2,620¥(339)¥(2,797)¥ 4,525¥2,423Total
net assets¥77,966

Changes during period
Dividends of surplus(1,960)

Profit attributable to owners of parent

7,468

Purchase of treasury shares(165)

Reversal of revaluation reserve for land

10Merger of consolidated subsidiaries

2

Net changes in items otherthan shareholders’ equity

5,939

673

(10)

(487)

4,756

10,871

171

11,042

Total changes during period

5,939

673

(10)

(487)

4,756

10,871

171

16,397

Balance at end of period¥11,303¥ 351¥2,609¥(826)¥1,959¥15,396¥2,594¥94,364

54 FURUKAWA CO., LTD.

Fiscal year ended March 31, 2022

(Millions of yen)
Shareholders’ equity

Balance at beginning of period

Share capital

Capital surplus

Retained earnings

Treasury shares

Total
shareholders’ equity¥28,208¥ 2¥50,025¥(1,862)¥76,373

Changes during period
Dividends of surplus(1,953)(1,953)

Profit attributable to owners of parent

6,477

6,477
(334)

Purchase of treasury shares

(334)

7

Reversal of revaluation reserve for land7

Net changes in items otherthan shareholders’ equity
—

—

4,531

(334)

4,196

¥28,208¥ 2¥54,557¥(2,197)¥80,570

Total changes during period
Balance at end of period

Fiscal year ended March 31, 2022

(Millions of yen)
Accumulated other comprehensive income
Total
Valuation
DeferredForeignaccumulateddifference on
gains or Revaluation currency Remeasurements
Nonotheravailable-for-sale losses
reservetranslationof definedcomprehensive controllingsecurities
on hedges for land adjustment benefit plansinterests
incomeBalance at beginning of period¥11,303¥ 351¥2,609¥(826)¥1,959¥15,396¥2,594Total
net assets¥ 94,364

Changes during period
Dividends of surplus(1,953)

Profit attributable to owners of parent

6,477

Purchase of treasury shares

(334)
7

Reversal of revaluation reserve for land
Net changes in items otherthan shareholders’ equity
Total changes during period
Balance at end of period

528

(644)

(7)

862

547

1,286

227

1,513

528

(644)

(7)

862

547

1,286

227

5,710

¥11,832¥(292)¥2,602¥   35¥2,506¥16,683¥2,821¥100,075

Annual Report 2022

55

Corporate Data
Stock Data (As of March 31, 2022)

Corporate Data (As of March 31, 2022)
Company Name:

Furukawa Co., Ltd.

Number of Shares Authorized:

80,000,000 shares

Head Office:Number of Shares Outstanding:

40,445,568 sharesTel:

2-6-4 Otemachi, Chiyoda-ku, Tokyo
100-8370, Japan (Tokiwabashi Tower)+81-3-6636-9501

Date of Foundation:

August 1875

Number of Shareholders:

19,670Date of Establishment:

April 1918

Stock Exchange Listing:Tokyo Stock Exchange: Prime Market

Securities Code Number:

5715

Employees:

2,804 (Consolidated)

Principal Shareholders(As of March 31, 2022)

Stock Transfer Agent:

Number of Percentage ofSharesTotal Shares(%)(Thousands)

The Master Trust Bank of Japan, Ltd. (trust account) 4,953

12.75

Asahi Mutual Life Insurance Co.

2,373

6.11

Seiwa Building Co., Ltd.

1,935

4.98

Custody Bank of Japan, Ltd. (trust account)

1,793

4.62

The Yokohama Rubber Co., Ltd.

1,341

3.45

Kawashima Co., Ltd.

1,101

2.83

Furukawa Electric Co., Ltd.

877

2.26

Fuji Electric Co., Ltd.

862

2.22

Chuo-Nittochi Co., Ltd.

687

1.77

ADEKA Corporation

663

1.70

Notes: 1. The above excludes the Company’s holdings of treasury stock, totaling		1,621,936 shares.
2. The Company’s holdings of treasury stock, totaling 1,621,936 shares,
		are excluded from shareholding ratio calculations.

Sumitomo Mitsui Trust Bank, Limited
4-1, Marunouchi 1-chome, Chiyoda-ku,
Tokyo, 100-0004 Japan

Composition of Shareholders(As of March 31, 2022)
Financial Instruments Firms(Securities Companies)

1.13 %

Foreign Institutions

14.54 %

4.01%

Individuals and Others

24.23 %

Other Japanese Companies

26.45 %

Financial Institutions

29.64 %* For information on Directors and Audit & Supervisory Board Members,
please see pages 26–28.

Complete upgrade of our corporate website showing the uniqueness ofthe Furukawa Company GroupThe upgrade includes enhanced content, easy-to-understand navigation, andmulti-device compatibility, as well as better text readability, information clarity,and design quality. We have also introduced a new page on sustainability anda revamped corporate brochure. Please take a look.

https://www.furukawakk.co.jp/en/

Included in FTSE Blossom Japan Sector Relative Index
In April 2022, Furukawa Co., Ltd. was selected for the first time as a constituent of the FTSE
Blossom Japan Sector Relative Index, which reflects the performance of Japanese companies
that excel in addressing ESG issues. Going forward, we will further strengthen our ESG
initiatives and actively disclose information to earn inclusion in the FTSE Blossom Japan Index,
which has stricter selection criteria.

56 FURUKAWA CO., LTD.

Treasury StockCorporate History
1875

Began the operation of the Kusakura Copper Mine in ­Niigata(Company foundation).

1877

Began the operation of the
Ashio Copper Mine in Tochigi.

1900

Set up a machinery works at the
Ashio Copper Mine and enteredinto the machinery business.

1914

Manufactured the first rock drillin Japan.

1918

1944

Spun off mining business from
Furukawa General Partnershipand established Furukawa Mining Co., Ltd.
Bought Osaka Smelter of Toa
Chemical Smelting Co., Ltd., andestablished it as Osaka Cementation and Refining. Entered into
the chemical business.
Built the Oyama Works of theMachinery Division of the Ashio
Copper Mine in Tochigi.

1950

Built the Takasaki Works of theRock Drill Division in Gunma.

1951

Began manufacturing oftitanium dioxide and cuprous
oxide at Osaka Cementation
and Refining.

1962

The key to the success of the
Furukawa Company Groupbegan with the developmentof the Ashio Copper Mine.

The first domestic rock drill
was developed (for the Ashio
Copper Mine).

At the Oyama Works, pumps
and mining machinery for copper mines were manufactured,
not only for internal use but
also to sell externally.

At the Takasaki Works, rock
drills were mass produced, andwe established the position of aleading rock drill manufacturer.

2003

Established a joint company for the
manufacturing and distribution of
UNIC cranes in China.

2005

Spun off the Machinery business,
Metals business, and Electronic
Materials and Chemicals businessand shifted to a group management
structure as the Furukawa Company
Group to enhance management.

2006

Established a rock drills sales company in China.

2007

Formed a capital and businessalliance for the GaN semiconductor
epi-wafer business with POWDEC
K.K.

2008

Furukawa Industrial Machinery Systems Co., Ltd. merged with
Furukawa Otsuka Iron Works Co., Ltd.

2009

Made Tohpe Corporation, which
manufactures and distributes paints
and chemicals, into a consolidated
subsidiary.

2010

Acquired interest in Canadiancopper mine.

2011

Established a sales company ofrock drill products in India.

1987

Bought UNIC Corporation.

1989

The Japanese name changed
from Furukawa Kogyo Kabushiki Kaisha to Furukawa Kikai
Kinzoku Kabushiki Kaisha.

1990

Bought an American breaker sales
and manufacturing company.

1997

Established a manufacturer of
UNIC products / components
in Thailand.

1998

Established a sales company ofrock drill products in Holland.

Acquired interest in Gibraltar
Copper Mine (Canada)

Established a sales company ofrock drill products in Panama.

2012

Established sales company for UNIC
products in Russia.
With the sale of all of its shares inFurukawa Commerce Co., Ltd., theGroup has withdrawn from the fuelsbusiness.

Completed the Furukawa /Outokumpu flash smelting plant
at Ashio Smelting and Refining.
Completed research anddevelopment of high-purity(99.999%) metallic arsenic andcommenced with sales of it.

This is an affiliate company for
the UNIC business establishedin Taian, Shandong, China,
which manufactures anddistributes truck-mounted
cranes and other products.

Arsenic is one of the by-products generated during thesmelting stage of copper
concentrates.

2013

The Group exited the paints businesswith the sale of all of its shares in
Tohpe Corporation.

Completed Muromachi Furukawa
Mitsui Building in Nihonbashi, Tokyo.

2014“UNIC” has become asynonym for truck-mounted
cranes in Japan.

This is an affiliate company for
the UNIC business establishedin Rayong, Thailand, which manufactures truck-mounted cranes andother products.

Established the Tsukuba Development
Center, which integrates a technology
research operation.

2015

Renewed Management Philosophy
and established Vision for 2025.

2018

Established sales company forrock drills and other products
in Malaysia.

2021
This is an affiliate company forthe construction and mining
machinery business establishedin Utrecht, Holland, which
distributes rock drill products.

Established a coil processing
company in the Philippines.

Muromachi Furukawa Mitsui
Building, consists of a commercial
facility (COREDO Muromachi 2),
offices, and rental accommodation.

An affiliated company for theelectronic materials businessmakes coils in Bulacan Province,
Philippines.

Consolidated head office functions
and relocated to Tokiwabashi Tower
in Otemachi, Tokyo.
Acquired Yamaishi Metal Co., Ltd.,a manufacturer of metal powder.

Tokiwabashi Tower (in Tokyo
Torch redevelopment district)
Annual Report 202257

2-6-4 Otemachi, Chiyoda-ku, Tokyo 100-8370, Japan

https://www.furukawakk.co.jp